A Firm in Monopolistic Competition Is Similar to a Firm

question 17

Multiple Choice

A firm in monopolistic competition is similar to a firm in perfect competition because they both

• A)can earn only zero economic profit in the long run.
• B)can earn only zero economic profit in the short run.
• C)maximize their profits by producing where P = MR = MC.
• D)Both answers A and C are correct.
• E)Both answers B and C are correct.

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Definitions:

Quantitative Model

A quantitative model uses mathematical equations and numerical data to represent a situation or problem, enabling objective analysis and predictions.

Qualitative Model

A model that relies on non-numeric data, such as expert opinion or case studies, to analyze and predict outcomes or behaviors.

Degree of Uncertainty

A measure or assessment of the unpredictability or risk associated with a decision, project, or future event.

Human Capital

The combined abilities, expertise, and non-physical resources of people that contribute to producing economic benefits for themselves, their places of work, or their local area.