In Perfect Competition as Well as in Monopolistic Competition

question 421

Multiple Choice

In perfect competition as well as in monopolistic competition,

• A)marginal revenue is equal to price for each firm.
• B)profit is positive in a long-run equilibrium for each firm.
• C)entry and exit by firms are restricted.
• D)there are many firms in a single market.

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Definitions:

Opportunity Cost

The cost of the next best alternative forgone as a result of making a decision.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods.

Marginal Product

The increase in output that results from employing one more unit of a factor of production.

Income Effect

How an individual's or economic income shift influences the demand for goods or services.