The Downward-Sloping Demand Curve of a Monopolistic Competitor

question 116

Multiple Choice

The downward-sloping demand curve of a monopolistic competitor:

• A) reflects product differentiation.
• B) becomes horizontal in the long run.
• C) indicates collusion among the members of the product group.
• D) ensures that the firm will produce at minimum average cost in the long run.

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Definitions:

Commodity

A fundamental merchandise in commerce that can be swapped with other merchandise of a similar nature.

Maximise

To increase to the greatest possible amount or degree within a given set of constraints, often used in the context of profit or utility maximization.

Input

A resource or component used in the production process to produce goods and services.

Production Function

A production function is a mathematical model that describes the relationship between inputs used in production (like labor and capital) and the output produced.