A Monopolistically Competitive Firm Usually Charges Less Than a Monopoly

question 41

Multiple Choice

A monopolistically competitive firm usually charges less than a monopoly firm because

• A) it is part of a group of firms that has formally agreed to control the price and the output of a product.
• B) its primary goal is to reap monopoly profits by replacing competition with cooperation.
• C) producing homogenous output is more expensive than producing differentiated output.
• D) it faces some degree of competition due to low barriers to entry.
• E) it has a monopoly,but potential entrants exist in the form of contestable markets.

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Definitions:

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