Because There Are Low Barriers to Entry in a Monopolistically

question 270

Multiple Choice

Because there are low barriers to entry in a monopolistically competitive market

• A) there are many firms in the industry.
• B) they produce a homogeneous product.
• C) the firms are price takers.
• D) there is no non-price competition.

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Definitions:

Opportunity Cost

The act of selecting one alternative leads to the loss of possible gains that could have been obtained from other options.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than others, leading to more efficient trade possibilities.

Absolute Advantage

The ability of a country or entity to produce a good more efficiently (using fewer resources) than another country or entity.

Economic Efficiency

A condition where resources are allocated in a way that maximizes the production of goods and services at the lowest cost to society.