Asked by Hannah DeMontmorency on May 04, 2024
Verified
An important similarity between a monopolistically competitive firm and a purely competitive firm is that:
A) both face perfectly elastic demand schedules.
B) economic profit tends toward zero for both.
C) both realize productive efficiency.
D) both realize allocative efficiency.
Allocative Efficiency
A state of the economy in which production represents consumer preferences; every good or service is produced up to the point where the last unit provides a benefit to consumers exactly equal to the cost of producing it.
Economic Profit
The gap between the total income and the sum of all expenses, covering both direct and indirect costs.
Perfectly Elastic
A situation in economics where the quantity demanded or supplied changes by an infinite amount in response to any change in price; highly responsive.
- Examine the similarities and differences between monopolistic competition, pure competition, and a monopoly.
- Evaluate the economic efficiency and resource allocation in monopolistically competitive markets.
Verified Answer
Learning Objectives
- Examine the similarities and differences between monopolistic competition, pure competition, and a monopoly.
- Evaluate the economic efficiency and resource allocation in monopolistically competitive markets.
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