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Questions and Answers
Which of the following is a characteristic of the long-run equilibrium in a monopolistically competitive market?
Which of the following is a characteristic of the long-run equilibrium in a monopolistically competitive market?
- Price is determined by the government
- Price equals average total cost (correct)
- Price equals marginal cost
- Price exceeds average total cost
What is one difference between monopolistic competition and perfect competition?
What is one difference between monopolistic competition and perfect competition?
- Price is determined by the government
- Excess capacity (correct)
- Price equals marginal cost
- Price equals average total cost
Why does price exceed marginal cost in a monopolistically competitive market?
Why does price exceed marginal cost in a monopolistically competitive market?
- Due to government regulations
- Due to firms manipulating prices
- Due to profit maximization (correct)
- Due to free entry and exit
What is one critique of advertising?
What is one critique of advertising?
How do defenders of advertising argue it benefits customers?
How do defenders of advertising argue it benefits customers?
What is branding?
What is branding?
What is one effect of excess capacity in monopolistic competition?
What is one effect of excess capacity in monopolistic competition?
Why does price equal average total cost in the long-run equilibrium of a monopolistically competitive market?
Why does price equal average total cost in the long-run equilibrium of a monopolistically competitive market?
What is one argument against the ability of policymakers to correct inefficiencies in monopolistic competition?
What is one argument against the ability of policymakers to correct inefficiencies in monopolistic competition?
What is one noteworthy difference between monopolistic competition and perfect competition?
What is one noteworthy difference between monopolistic competition and perfect competition?
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