Which of the Following Statements Is True About Monopolistically Competitive

question 89

Multiple Choice

Which of the following statements is true about monopolistically competitive firms?

• A)Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
• B)Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
• C)Like perfectly competitive firms, monopolistically competitive firms maximize their profits by setting price equal to marginal cost.
• D)Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.

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Definitions:

Shortage Costs

Shortage costs are the expenses incurred by a business when it does not have enough inventory or resources to meet demand, including lost sales and dissatisfied customers.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.

Investment

Assigning monetary assets in hopes of achieving financial gain or income.

Cash Flow Timeline

A visual representation that shows the schedule of inflows and outflows of cash within a business over a specific period.