Under the Conditions of Monopolistic Competition

question 305

Multiple Choice

Under the conditions of monopolistic competition

• A) firm profits are higher in the long run than in the short run.
• B) average costs of production are the same in the short run as they are in the long run.
• C) economic profit is zero in the long run.
• D) price equals marginal cost.

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Definitions:

Few Substitutes

A market condition where there are limited alternatives available for a particular product or service, potentially leading to higher prices.

Price-Inelastic

Describes a situation where the demand for a good or service is relatively unchanged despite changes in its price.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of the good that producers are willing and able to sell, usually upward sloping.

Budget Proportion

The allocation of financial resources among various categories or items in a budget.