One prediction about monopolistic competition is that it has higher unit costs than perfect competition. But it is unreasonable to conclude that monopolistic competition is therefore bad for consumers because
A) consumers benefit from an increased variety of products.
B) higher production costs means more employment.
C) consumers benefit from products becoming more homogeneous.
D) consumers benefit from lower prices.
E) consumers benefit because of an increase in quantity available.
Ans: A) consumers benefit from an increased variety of products.
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If identical firms sell an undifferentiated product, advertising is likely to be
A) used to attack the rivals' products. B) collectively undertaken by the industry group. C) strategically aimed at deterring entry. D) focused on secret ingredients.
Restricted Formulary Hospitals are big purchasers of pharmaceutical products and have to stock many different chemical entities. However, they increasingly do not stock all. Instead, they restrict their formularies to many of the treatments in a therapeutic class but consciously exclude a few. How does this help them negotiate?