1. A monopolistically competitive firm differs from a firm in perfect competition because a monopolistically competitve...

1. A monopolistically competitive firm differs from a firm in perfect competition because a monopolistically competitve firm is characterized by:

A. zero economic profits.
B. marginal revenue equals marginal cost.
C. price is greater than marginal cost in equilibrium.
D. a horizontal demand curve.

2. A monopolistically competitive firm is different from a monopoly because a monopolistically competitive firm is characterized by:
A. zero economic profits.
B. marginal revenue equals marginal cost.
C. price = min ATC
D. no deadweight loss.

3. The zero-economic profit condition for a monopolistically competitive firm is due to the entry and exit of firms with similar products.
True
False

4. Advertising has a strictly positive impact on economic wellbeing.
True
False

Solutions

Expert Solution

a) "B"

A firm in the monopolistically competitive market tries to maximize profit and by doing so they will try to match the MArginal revenue with the marginal cost.

b) "A"

A firm in a monopolistically market will have zero economic profit, unlike a monopoly firm which earns a positive profit.

c) True

A monopolistic competitive firm allows for an easy entry and exit of the firms making the economic profit zero.

d) "False"

The advertisement doesn't always have a strictly positive impact on economic well-being.

Rahul Sunny answered 1 year ago

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