How Does a Monopoly Differ from Monopolistic Competition

question 105

Multiple Choice

How does a monopoly differ from monopolistic competition?

• 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:

Mass Marketing

a marketing strategy that targets a large, general audience with a uniform message, rather than tailoring messages to specific demographic or psychographic segments.

Positioning

The activities a firm undertakes to create a certain perception of its product in the eyes of the target market.

Product's Profit Potential

The expected or estimated ability of a product to generate profit or financial gain.

Test Marketing

Introducing a new product in its final form to a geographically limited market to see how well the product sells and to get reactions from potential users.