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Questions and Answers
What allows firms in monopolistic competition to have some control over the price of their product?
What allows firms in monopolistic competition to have some control over the price of their product?
- Government regulations
- Low production costs
- High market demand
- Product differentiation (correct)
What is a key characteristic of firms in perfect competition?
What is a key characteristic of firms in perfect competition?
- They engage in non-price competition
- They produce unique products
- They are price takers (correct)
- They have significant market power
What limits the market power of firms in monopolistic competition?
What limits the market power of firms in monopolistic competition?
- Government intervention
- Presence of close substitutes (correct)
- Low consumer demand
- High barriers to entry
In which type of competition do firms engage in non-price competition such as advertising and product differentiation?
In which type of competition do firms engage in non-price competition such as advertising and product differentiation?
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What is a distinguishing feature of perfect competition compared to monopolistic competition?
What is a distinguishing feature of perfect competition compared to monopolistic competition?
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