In Comparing Monopolistic Competition to Perfect Competition, the Major Difference

question 12

Multiple Choice

In comparing monopolistic competition to perfect competition, the major difference lies in:

• A) the number of firms in each industry.
• B) the typical firm size in each industry.
• C) the degree of entry barriers in each industry.
• D) the demand curves faced by individual firms in each industry.
• E) the long-run profits of firms in each industry.

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Definitions:

Specialized Resources

Inputs in the production process that have specific uses and are not easily adaptable to other types of production.

Comparative Advantage

The capacity of a person, business, or nation to create a product or offer a service with a smaller opportunity cost compared to its rivals.

Opportunity Cost

The cost of missing out on the next best alternative when making a decision.

Total Output

The total quantity of goods or services produced by a firm or an economy in a specific period.