The basis for monopolistic competition is product differentiation. price. econom

Question

The basis for monopolistic competition is product differentiation. price. economies of scale. Which statement is true? The monopolistic competitor always makes a profit in the short run. The monopolistic competitor operates at peak efficiency. Product differentiation takes place in the minds of the buyers. None of these statements are true. Monopolistic competition may lead to each of the following except inefficiency. over-differentiation. long-run break-even. monopoly profits. In order for product differentiation to take place there must be physical differences among the products. there cannot physical differences among the products. there may or may not be physical differences among the products. Which one of these firms would be a monopolistic competitor? AT&T; A local phone company A Tex-Mex restaurant in San Antonio, Texas The only used car dealer within 300 miles of Livingston, Montana Which statement is true? The typical monopolistic competitor is a very large firm. The crucial feature of monopolistic competition is that there are very few firms in the industry. Under monopolistic competition, product differentiation can take place only if there are physical differences among the products. None of these statements are true.

Explanation / Answer

1. A. product differentiation- its teh basic of Monopolistic market where there are few producers with different products manage the market.

2. The monoplistic competetior always makes profit in the short run

3. Monopoly profits. It does not earn as monopoly firms earn. So its considered as inefficent market.

4. There may be or may not be physical difference in the products. as teh features can be differnet keeping physcial looks same.

5. c. a tex-mex restaurant in San Antonio, Texas. as it will be different products which are not substitues.

6. b. teh crucial feature of monoploystic competition is that there are very few firms in the industry. ts an e=ineeficient market with product differentiation prime basic.

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