Which of the Following Would Weaken the Argument That Monopolistically

question 14

Multiple Choice

Which of the following would weaken the argument that monopolistically competitive firms should be regulated by the government?

• A)Monopolistically competitive firms and perfectly competitive firms are similar in that their equilibrium prices and quantities are efficient.
• B)Monopolistically competitive firms earn zero economic profits in the short run just as perfectly competitive firms do.
• C)The benefits of increased product variety produced by monopolistic competition offsets the relatively small welfare costs.
• D)The cost of regulating a monopolistically competitive firm could possibly be lower than the deadweight loss from monopolistic competition.

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Definitions:

Gross Domestic Product (GDP)

A measure of the total economic production of a country, representing the total value of all goods and services produced over a specific time period.

Investment

The process of distributing funds with the aim of earning revenue or gains.

Imports

Goods or services brought into a country from abroad for sale, typically requiring payment to the origin country or entity.

Sole Proprietorship

A business structure where a single individual owns, manages, and is personally responsible for all aspects of the business, including liabilities.