One Difference Between Perfect Competition and Monopolistic Competition Is That

question 120

Multiple Choice

One difference between perfect competition and monopolistic competition is that _____

• A)firms in perfect competition cannot earn a long-run economic profit, whereas firms in monopolistic competition can earn a long-run economic profit.
• B)firms in perfect competition take full advantage of economies of scale in long-run equilibrium, whereas firms in monopolistic competition do not take advantage of economies of scale in long-run equilibrium.
• C)firms in perfect competition can easily exit the market, whereas firms in monopolistic competition find it difficult to exit the market.
• D)firms in perfect competition face a downward-sloping demand curve, whereas firms in monopolistic competition face a horizontal demand curve.
• E)there are many firms in a perfectly competitive market, whereas there are a few firms in a monopolistically competitive market.

---

Definitions:

Embargo

A government order that restricts commerce with a specified country or the exchange of specific goods.

Dumping

In international trade, it's the practice of selling a product in a foreign market at a price that is below the cost to produce it or below the price in the home market.

Tariffs

Taxes imposed by a government on imported goods to increase their price and protect domestic industries from foreign competition.

Predatory Dumping

The practice of selling a product in a foreign market at a price below its cost of production to undercut local competitors and gain market share.