A Monopolistic Competitor Is Like a Monopolist in the Long

question 267

Multiple Choice

A monopolistic competitor is like a monopolist in the long run in that when economic profits are

• A) equal to zero, positive economic profits are made.
• B) equal to zero, economic profits are made.
• C) greater than zero, changes in output are due to changes to plants by existing firms and there is no entry.
• D) greater than zero, price exceeds marginal cost.

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the current market price or the price for similar assets.

Exchange Transactions

Transactions in which each party to the deal exchanges goods or services of comparable value; this can include trade of goods, services, or financial assets.

Tangible Assets

Physical assets that can be touched or felt, such as machinery, buildings, and land.

Cost Method

An accounting method used to value investments, where the investment is recorded on the balance sheet at its purchase cost.