In a Monopolistically Competitive Market with Dixit-Stiglitz Preferences, Equilibrium Price

question 7

True/False

In a monopolistically competitive market with Dixit-Stiglitz preferences, equilibrium price falls as the goods in the differentiated product market become more substitutable.

---

Definitions:

Government Intervention

Actions taken by a government to influence or directly regulate the economy, markets, or specific industries, often to correct market failures or promote social welfare.

Excess Demand

Occurs when the quantity demanded of a good or service at a given price exceeds the quantity supplied, often leading to a shortage in the market.

Price Of Burritos

The cost consumers pay to purchase a burrito, which can vary based on ingredients, location, and restaurant type.

Demand Shifts

Changes in the desire or need for a product or service, influenced by factors such as price, consumer preferences, and income levels.