Which of the Following Is a Characteristic of a Monopolistically

question 376

Multiple Choice

Which of the following is a characteristic of a monopolistically competitive market? I. Firms sell differentiated products.
II) Each firm earns a positive economic profit in the long run.
III) Firms freely enter and exit the market.

• A) II only
• B) I and II only
• C) I and III only
• D) I, II, and III

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Definitions:

License Fee

A charge paid for permission to use intellectual property, enter a market, or perform certain activities within a regulatory framework.

Economic Profit

The surplus remaining after total costs are subtracted from total revenue, considering both explicit and implicit costs.

Marginal Revenue

The additional income earned by a firm from selling one more unit of a good or service.

Marginal Cost

The cost of producing one additional unit of a good or service, often used in decision-making to determine the optimal level of production.