A Decrease in the Number of Competitors in a Monopolistically

question 36

True/False

A decrease in the number of competitors in a monopolistically competitive market causes an increase in the price elasticity of demand for the output of each of the remaining firms in the market.

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Definitions:

Finished Goods Inventory

Represents the stock of completed products that are ready to be sold but have not yet been sold to customers.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been subtracted, indicating how much contributes to covering fixed costs and generating profit.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for a business.