The Major Similarity Between Monopolistic Competition and Perfect Competition Is

question 236

Multiple Choice

The major similarity between monopolistic competition and perfect competition is

• A) the shape of the demand curve.
• B) that both assume many buyers and sellers.
• C) price equals marginal revenue in each.
• D) both assume products are differentiated.

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a product.

Average Variable Cost

The per unit cost of production excluding fixed costs, calculated by dividing the total variable costs by the quantity of output produced.

Short-Run Production

The period in which at least one input or factor of production is fixed, allowing firms to adjust only certain inputs to change output levels.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the total quantity of output produced.