A Monopolistically Competitive Firm Differs from a Perfectly Competitive Firm

question 212

Multiple Choice

A monopolistically competitive firm differs from a perfectly competitive firm in the long run in that

• A) the demand curve faced by a monopolistically competitive firm is downward sloping, while the demand curve faced by a perfectly competitive firm is horizontal.
• B) profits are positive for a monopolistically competitive firm and zero for a perfectly competitive firm.
• C) profits are zero for a monopolistically competitive firm and positive for a perfectly competitive firm.
• D) marginal cost equals the market price for a monopolistically competitive firm but not for a perfectly competitive firm.

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Definitions:

Social Norms

Shared guidelines or rules that prescribe the behavior that is acceptable within a group or society.

Psychology

The science that studies behavior and mental processes.

Behavior

Actions or reactions of an organism, often in response to external stimuli, observed and measurable.

Introspection

The examination of one's own conscious thoughts and feelings, used in psychology as a method of exploring the workings of the mind.