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:

Credit Balance

A situation in an account where the total credits exceed the total debits.

Consolidated Buildings

The combined value of all buildings and related facilities owned by a company as presented in its consolidated financial statements.

Common Stock

A type of equity security that represents ownership in a corporation, entitling the holder to a share of the company's success through dividends and capital appreciation.

Acquisition Transaction

A financial and business deal where one company purchases a portion or all of another company's shares or assets, effectively gaining control or significant influence over the target company.