A Monopolistic Competitor Does Not Earn Profits in the Long

question 205

True/False

A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

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Definitions:

Marginal Productivity

The additional output that is produced by adding one more unit of a specific input while holding other inputs constant.

Labor

The combined physical and mental exertion employed in creating goods and services.

Marginal Physical Product

The change in total physical output that results from a one-unit increase in the quantity of one input, holding other inputs constant.

Marginal Revenue Product

The extra income derived from the use of an additional unit of a resource or input in production.