Which of the Following Combinations of Characteristics Best Describes a Monopolistically

question 152

Multiple Choice

Which of the following combinations of characteristics best describes a monopolistically competitive firm?

• A)Supplies a small share of the market and sells a product that is undifferentiated from other firms in the market.
• B)Supplies a large share of the market and sells a product that is undifferentiated from other firms in the market.
• C)Supplies a small share of the market and sells a product that is slightly different than its competitors.
• D)Supplies a large share of the market and sells a product that is slightly different than its competitors.

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Definitions:

Residual Income

The income that remains after deducting all required costs of capital from operating income, used as a measure of profitability.

Margin

Margin refers to the difference between the selling price of a good or service and its cost of production, usually expressed as a percentage of the selling price.

Return On Investment

A gauge of an investment's profit, expressed as the return percentage in comparison to the cost of the investment.

Residual Income

Residual income is the profit remaining after deducting all required costs of capital from operating income.