If the Number of Firms in a Monopolistically Competitive Industry

question 6

Multiple Choice

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

• A) the likelihood of realizing economic profits in the long run would be enhanced.
• B) individual firms would now be operating at outputs where their average total costs would be higher.
• C) the industry would more closely approximate pure competition.
• D) the likelihood of collusive pricing would increase.

Understand the principles of resource pricing and its impact on income distribution.

Identify and explain the concept of marginal productivity and its role in income distribution and resource allocation.

Analyze the effects of technology on employment and the substitution and complementarity between capital and labor.

Recognize the conditions for profit maximization in firms with respect to their input use.

---

Definitions:

Worst Outcome

The most negative or least desirable result possible in a given situation.

Self-Disclosure

The act of revealing personal, private information about oneself to others, fostering intimacy and trust in relationships.

Waste Time

The act of using time on activities that are not productive or do not contribute to one's goals.

Gut-Level Communication

A form of interaction that is based on instinctual feelings rather than intellectual analysis.