monopolistically competitive firms can be regulated to Question 10 (1 point) Mon

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monopolistically competitive firms can be regulated to

Question 10 (1 point) Monopolistically competive firms can: O a G Be regulated to P-MC and P-ATC Be regulated to P=MC and P-Minimum of ATC O d O e Be regulated at P=MC but not to P=Minimum of ATC Not be regulated to either P=MC or P=Minimum of ATC Not be regulated to P=MC but can be regulated to P=Minimum of ATC Question 11 (1 point) The downward sloping demand curve that a monopolistically competitive firm faces is a result a The same products as its competitors Ob Agreement on price and output with other firms c Differentiated product from its competitors d Economies of scale in the industry Oe Control of the only resource used in production

Explanation / Answer

10. b) regulated at P = MC and P = ATC.

11. c) Differentiated product from its competitors.

Monopolistic competition refers to a market situation in which there are large number of buyers and sellers. The sellers sell closely related or differentiated products but not identical product. The products are close substitutes of each other. Product differentiation is the most important feature of monopolistic competition. Each firm under monopolistic competition enjoys the monopoly over the brand of the commodity and thus the firm has the control over the price of the commodity. Under monopolistic competition, MR < AR and AR and MR curve slope downwards and MR curve lies below AR curve. But these curves are more elastic. Example: Firms producing different brands of shampoos like Sunsilk, Pantene, Head & Shoulders, Dove etc. Monopolistic competition combines the features of monopoly and perfect competition.

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