If We Are to Discuss Why the Term "Monopolistic Competition

question 8

Multiple Choice

If we are to discuss why the term "monopolistic competition" is used,the best description would be that the industry is "monopolistic" because it:

• A) has high barriers to entry but is "competitive" because it has many firms.
• B) has low barriers to entry but is "competitive" because it has few firms.
• C) has product differentiation but is "competitive" because it has many firms.
• D) has a monopoly but is "competitive" because there are low barriers to entry, meaning it has potential rivals.
• E) holds patents but is "competitive" because other firms might invent similar patentable products.

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Definitions:

Gross Investment

The total amount of money spent on capital goods, or assets that will provide productive capacity for the future, without deducting for depreciation.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Capital Stock

The total value of all physical assets owned by a company that are used in producing goods and services.

Interest Rate

The percentage charged or paid for the use of money, typically expressed as an annual rate on loans or earned on deposits.