Which of the Following Statements Accurately Brings Out the Difference

question 90

Multiple Choice

Which of the following statements accurately brings out the difference between monopolistic competition and an oligopoly?

• A) Sellers in an oligopoly provide highly differentiated products; in monopolistic competition, the products sold are undifferentiated or standardized.
• B) In an oligopoly, the number of buyers is large; in monopolistic competition, the number of buyers is limited to three or four.
• C) Firms in an oligopoly have no pricing power; firms in a monopolistically competitive industry have the ability to raise prices.
• D) In monopolistic competition, many firms compete against each other; in an oligopoly, there are few large firms competing against each other.

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Definitions:

Negative Excess Reserves

A situation where a bank has less reserves than the minimum required reserve, indicating a potential liquidity problem.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by central banking authorities, to ensure bank liquidity.

Actual Reserves

The physical amount of a commodity or cash held as reserves in a financial institution or by an organization.

Monetary Policy

Measures undertaken by a government's central bank to regulate the economy's money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.