Monopolistic Competition Differs from Perfect Competition Because

question 119

Multiple Choice

Monopolistic competition differs from perfect competition because

• A)monopolistic competitors advertise and differentiate their product.
• B)monopolistic competitors have products with no close substitutes.
• C)monopolistic competitors produce at the peak level of efficiency.
• D)monopolistic competitors can make a profit even in the long run.

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Definitions:

Pareto Efficient

A state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.

Net Benefit

The total positive impact of a decision or action, subtracting any costs or negative effects associated with it.

Trade

The exchange of goods, services, or both between parties, which can occur domestically or internationally.

Perfectly Competitive Market

A market structure characterized by many sellers and buyers, homogeneous products, and the free entry and exit of firms, leading to efficient outcome prices.