Which of the Following Statements About the Competitive Environment Is

question 52

Multiple Choice

Which of the following statements about the competitive environment is TRUE?

• A) In monopolistic competition a seller has a down-sloping demand curve due to the lack of any substitute products.
• B) In pure competition, an individual firm is usually faced with a very inelastic demand curve.
• C) Firms in oligopoly should avoid price cutting.
• D) The industry demand curve in oligopoly is usually horizontal.
• E) All of the above.

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Definitions:

Sole Proprietorship

A business owned and operated by a single individual, with no distinction between the business and the owner.

Closely Held Corporation

A type of company that is owned by a small group of people who are usually closely associated with the business.

Publicly Trades

Pertains to companies whose shares are bought and sold on stock exchanges, allowing investors to purchase ownership interests in the businesses.

Auction Market

A market where buyers and sellers enter competitive bids simultaneously; the price is determined by the highest bid received by the seller.