How Does a Monopoly Differ from Monopolistic Competition

question 105

Multiple Choice

How does a monopoly differ from monopolistic competition?

• A)A monopoly has market power while a firm in monopolistic competition does not have any market power.
• B)A monopoly can never incur a loss, but a firm in monopolistic competition can.
• C)In a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure.
• D)A monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

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Definitions:

Permanent/Temporary

This refers to the nature of employment or status of objects wherein 'permanent' indicates indefinite duration and 'temporary' indicates a fixed duration.

Normal Balance

Normal Balance is the side (debit or credit) where increases to the account are recorded, depending on the account type.

Permanent/Temporary

Describes accounts in financial reporting; permanent accounts show ongoing financial status, while temporary accounts track revenues, expenses, and dividends over a specific period.

Normal Balance

The side (debit or credit) of an account that increases its balance, reflecting the account's role in the accounting equation.