In a Monopolistically Competitive Market, a Successful New Restaurant

question 1

Multiple Choice

In a monopolistically competitive market, a successful new restaurant

• A)can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants.
• B)will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product.
• C)will face high entry barriers because of health and safety regulations to which all restaurants are subject.
• D)must obtain a trademark to ensure that it will break even in the long run.

Identify and understand different sources and consequences of natural monopoly.

Examine the absence or presence of supply curves in monopolistic markets.

Evaluate the theoretical underpinnings and practical implications of regulatory policies on monopolies.

Understand the concept of price discrimination and how it applies to monopolies.

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Definitions:

Hypotheses

Statements or predictions that can be tested through scientific research, designed to explain phenomena or the relationship between variables.

Population Proportion

The fraction of members in a group that possess a particular characteristic, often expressed as a percentage of the total population.

Confidence Interval

An assortment of values, from sampled evidence, which possibly contains the value of an unknown parameter of the population.

Estimator

An estimator refers to a statistic used to estimate the value of a population parameter based on sample data.