Monopolistic Competition Is a Market Structure in Which

question 115

Multiple Choice

Monopolistic competition is a market structure in which

• A) a large number of firms compete.
• B) firms produce identical products.
• C) firms compete only on product price.
• D) natural or legal barriers prevent the entry of new firms.

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Definitions:

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a firm to adjust to changes in market demand or supply.

Long-Run Industry

A period in which all factors of production and costs can be variable, allowing for adjustment to changes in market conditions.

Zero-Profit Equilibrium

A situation where a firm's total revenues exactly equal its total costs, resulting in no economic profit.

Entry

The act of entering or moving into a market or area of business to start operations or activities.