A Monopoly Differs from Monopolistic Competition in That

question 8

Multiple Choice

A monopoly differs from monopolistic competition in that

• A) a monopoly has market power while a firm in monopolistic competition does not have any market power.
• B) a monopoly can never incur a loss, but a firm in monopolistic competition can.
• C) in a monopoly there are significant entry barriers, but there are low barriers to entry in a monopolistically competitive market structure.
• D) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

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Definitions:

AVC Curve

Average Variable Cost Curve, it represents the change in variable cost associated with producing more units of a good or service.

Variable Input

An input in the production process that can be altered in the short term to adjust the level of output.

Output

Output is the total amount of goods and services produced by an economy or business over a set period, quantifying productivity and economic activity.

Short Run

A period in economics where at least one input (e.g., capital) is fixed, focusing on immediate effects rather than long-term outcomes.