Economists Have Long Debated Whether There Is a Significant Loss

question 259

Multiple Choice

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets benefit consumers despite any loss of well-being?

• A)Although consumers may pay a price greater than marginal cost for a product, the product is produced at the minimum average total cost.
• B)Although consumers may pay a price greater than marginal cost and the product is not produced at minimum average total cost, they benefit from being able to buy a differentiated product more closely suited to their tastes.
• C)Consumers pay a price equal to the marginal cost of producing a product, even though it is not produced at the minimum average total cost.
• D)Consumers are better off choosing from a variety of differentiated products, even though product differentiation causes barriers that restrict entry into monopolistically competitive markets.

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Definitions:

Cultural Discrimination

Prejudice or differential treatment based on cultural differences, often leading to the marginalization of a particular group.

Gender Discrimination

Unfair treatment or bias against individuals based on their gender, often resulting in unequal opportunities and impacts on professional and personal lives.

Asian Countries

Nations located in the Asian continent, known for diverse cultures, languages, economics, and geopolitical interests.

NAFTA Trade Agreement

Refers to the North American Free Trade Agreement, a treaty between Canada, Mexico, and the United States that aimed at eliminating most tariffs and barriers to trade and investment among the three countries.