The correct answer is: D. Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all…
Which of the following products is an example of monopolistic competition?
Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities. Clothing: The clothing industry is monopolistically competitive because firms have differentiated products and market power.
What is profit in monopolistic competition?
Companies in a monopolistic competition make economic profits in the short run, but in the long run, they make zero economic profit. The latter is also a result of the freedom of entry and exit in the industry.
What is true about a monopolistically competitor?
All firms in monopolistic competition have the same, relatively low degree of market power; they are all price makers. In the long run, demand is highly elastic, meaning that it is sensitive to price changes. In the short run, economic profit is positive, but it approaches zero in the long run.
Is Mcdonalds in the oligopoly industry?
McDonald’s is considered as an Oligopoly because oligopoly can only exist when a few firms are dominating the industry and have the ability to set prices. McDonald’s cannot be considered as a Monopoly because it does not single sell a good which is unique. McDonald’s rely on the actions of other businesses.
Which of the following industries is the best example of monopolistic competition?
The correct answer is b. Some of the significant examples include salons, restaurants, firms dealing with clothing and electronics. Additionally, the monopolistic competition market structure has characteristics drawn from a monopoly structure and a perfectly competitive structure.
Which is true of a monopolistically competitive firm in long run equilibrium?
Which of the following is true of a monopolistically competitive firm in long-run equilibrium? a) Price exceeds marginal revenue, and the firm earns positive economic profits. b) Price equals marginal revenue, and the firm earns positive economic profits. c) Price equals marginal cost, and the firm earns zero economic profits.
Why does a monopolistic firm advertise in an industry?
A monopolistically competitive firm advertises in order to… a) shift the demand curve for its product to the left. An industry consists of 100 small firms, and the largest firm accounts for only 2 percent of sales. Brand names are considered a signal of quality.
How does a monopolistic firm affect the demand curve?
A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until A. the firm exists the market B. the firm’s demand curve is tangent to its average total cost curve
Which is true about an imperfectly competitive market?
Which of the following statements relating to a firm in an imperfectly competitive market and a firm in a perfectly competitive market is true? a) An imperfectly competitive firm does not experience diminishing returns, while a perfectly competitive firm experiences diminishing returns.
