Which of the Following Is True About Monopolistic Competition but False

question 27

Multiple Choice

Which of the following is true about monopolistic competition but false about perfect competition?

• A) There are a large number of independently acting sellers.
• B) There are no barriers to entry.
• C) Firms can make an economic profit in the short run.
• D) Firms compete on their product's price as well as its quality and marketing.
• E) Firms cannot make an economic profit in the long run.

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Definitions:

Par Value

The nominal value of a bond or the stated value of stock as documented in the company's charter, frequently utilized in official paperwork.

Ask Price

The lowest price a seller is willing to accept for an asset in the financial markets; it contrasts with the bid price, which is the highest price a buyer is willing to pay.

Coupon Bond

A type of bond that provides periodic interest payments to its holder, based on a fixed interest rate (coupon rate) until its maturity, at which point the principal amount is repaid.

Accrued Interest

The interest that has accumulated on a bond since the last interest payment was made, which the buyer of the bond must pay to the seller if the bond is bought between interest payment dates.