Consider the Following Statement: "A Monopolistically Competitive Market in Which

question 91

Multiple Choice

Consider the following statement: "A monopolistically competitive market in which there are no entry barriers will have the identical long-run equilibrium as if the market were perfectly competitive." Is this statement correct?

• A)No,because firms in the monopolistically competitive market will not reach their minimum efficient scale as they would in perfect competition - the result is higher prices and lower output.
• B)No,because firms in the monopolistically competitive market do not produce at an output level where MC = MR,as in perfect competition,which leads to a different price and output in long-run equilibrium.
• C)No,firms in the monopolistically competitive market earn economic profits in the long run because they are facing a downward-sloping demand curve,whereas in perfect competition they earn zero profits.
• D)Yes,in the absence of entry barriers,new firms enter the industry until industry price and output are identical to perfect competition.
• E)Yes,in the absence of entry barriers,firms in the monopolistically competitive market will expand until they are producing at the minimum of their LRAC curves,just as in perfect competition.

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Definitions:

Typological Approach

A method in psychology that categorizes individuals into distinct types based on shared traits or behaviors.

Trait Approach

A method in psychology that focuses on the identification and measurement of specific traits or characteristics that can vary between individuals and are thought to be consistent over time.

Personality Types

Distinct patterns of thoughts, feelings, and behaviors that typify how individuals consistently interact with the world and others.

Factor Analysis

A statistical technique that explains the variation among observed, correlated variables through a smaller set of unseen variables known as factors.