Two Possible Reasons for the Existence of an Imperfectly Competitive

question 76

Multiple Choice

Two possible reasons for the existence of an imperfectly competitive market are:

• A)product differentiation and free trade.
• B)constant returns to scale and a lack of market regulation.
• C)increasing returns to scale and barriers to free entry.
• D)a lack of market segmentation and "U" shaped marginal cost curves.
• E)none of the above.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on quality, price, and brand.

Oligopoly

An oligopoly is a market structure in which a few firms dominate the industry, leading to limited competition.

Average Total Cost

Total cost divided by the quantity of output

Marginal Cost

Additional costs associated with the production of one more unit of a product or service.