Why Do Most Firms in Monopolistic Competition Typically Make Zero

question 238

Multiple Choice

Why do most firms in monopolistic competition typically make zero profit in the long run?

• A)because firms produce differentiated products
• B)because the lack of entry barriers would compete away profits
• C)because firms do not produce at their minimum efficient scale
• D)because the total market is not large enough to accommodate so many firms

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Definitions:

Cognitive Consistency Theories

A group of attitude theories stressing that people try to maintain internal consistency, order and agreement among their various cognitions.

Three-Component Model

A framework in psychology that describes an attitude as having cognitive, affective, and behavioral components.

Attitude

A mental inclination shown by assessing a specific entity with a certain level of preference or aversion.

Information Integration Theory

A psychological theory explaining how individuals combine information from different sources to form a judgment or attitude.