Which of the Following Best Explains Why Firms in Monopolistic

question 116

Multiple Choice

Which of the following best explains why firms in monopolistic competition face a downward-sloping demand curve while perfectly competitive firms do not?

• A)Monopolistically competitive industries have only a few firms.
• B)Monopolistically competitive firms face barriers to entry.
• C)Only industries with free entry and exit have firms that face horizontal demand curves.
• D)Firms in monopolistic competition are price takers.
• E)Firms in monopolistic competition sell a differentiated good.

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Definitions:

Taxation

The imposition of compulsory levies on individuals or entities by governments to fund public expenditures.

Market Value

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction.

Sales Tax

A tax imposed by government authorities on the sale of goods and services, paid for by the consumer at the point of purchase.

Sales Tax

A tax levied by a government on the sale of goods and services, usually calculated as a percentage of the purchase price.