Which of the Following Statements Is True About Monopolistically Competitive

question 89

Multiple Choice

Which of the following statements is true about monopolistically competitive firms?

• A)Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
• B)Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
• C)Like perfectly competitive firms, monopolistically competitive firms maximize their profits by setting price equal to marginal cost.
• D)Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.

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Definitions:

Open-Economy Macroeconomic Model

A framework used in economics to analyze and understand the behaviors and interactions of economies that engage in international trade and finance.

Import Quotas

Limits set by a government on the amount of a specific good that can be imported into the country.

Loanable Funds

The market model that describes the supply and demand for money that is available for borrowing and lending.

Foreign-Currency Exchange

The process of exchanging one country's currency for another, affecting trade, investments, and economic indicators.