Monopolistic Competition Is Similar to Perfect Competition for All of the Following

question 11

Multiple Choice

Monopolistic competition is similar to perfect competition for all of the following reasons except

• A)both have many firms in each industry.
• B)both have identical demand and marginal revenue curves.
• C)both make zero economic profits in the long run.
• D)both maximize profits at the output level where marginal revenue equals marginal costs.

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Definitions:

Interest Rate

The rate at which a borrower pays interest to a lender for borrowing money.

Government Securities

Financial instruments issued by a government to borrow money from investors, including bonds, notes, and bills, usually considered low-risk investments.

Money Supply

The full volume of monetary holdings in an economy, including cash, coins, and the deposits in checking and saving accounts, at a given point.

Actual Reserves

The total amount of funds that a bank has in its reserve account plus any cash on hand, used to satisfy reserve requirements.