Which of the Following Is an Assumption of Monopolistic Competition

question 145

Multiple Choice

Which of the following is an assumption of monopolistic competition?

• A) Firms produce identical (homogeneous) outputs.
• B) There are many firms in the industry.
• C) Production occurs with decreasing returns to scale technology.
• D) Each firm faces a perfectly elastic demand curve.

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Definitions:

Marginal Utility

The extra benefit or satisfaction gained by the consumption of one more unit of a product or service.

R&D Spending

Investment in research and development activities aimed at innovation, developing new products, or improving existing ones.

Marginal Cost

The hike in cost associated with the creation of an additional unit of a product or service.