Which of the Following Statements Is True About Monopolistically Competitive

question 319

Multiple Choice

Which of the following statements is true about monopolistically competitive firms?

• A)Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
• B)Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
• C)Like perfectly competitive firms, monopolistically competitive firms maximize their profits by settling price equal to marginal cost.
• D)Unlike perfectly competitive firms, monopolistically competitive firms face perfectly inelastic demand curves.

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Definitions:

ATC

Average Total Cost is the sum of all production expenses divided by the quantity of output produced, representing the per unit cost of production.

Barrier To Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.

Advertising

The task or career of generating marketing materials for business products or offerings.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service, critical for decisions on production levels.