Why Is the Administrative Burden of Regulating Price in a Monopolistically

question 42

Multiple Choice

Why is the administrative burden of regulating price in a monopolistically competitive market relatively large

• A)because of economies of scale
• B)because price is usually below marginal cost
• C)because of the large number of firms that produce differentiated products
• D)because firms produce with excess capacity

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Definitions:

GDP Price Index

A measure that reflects changes in the price level of all goods and services included in the Gross Domestic Product, used to calculate real GDP.

Inflation

The pace at which overall prices for goods and services increase, gradually diminishing the value of money.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often measured by consumer price indices.

Net Increase

The amount by which something grows or goes up, calculated by taking total gains and subtracting any losses.