Which of the following is not true of monopolistic competition?
a. There are a large number of buyers and sellers.
b. The firms produce differentiated products.
c. There exists free entry and exit of firms.
d. Each of the firms faces a horizontal demand curve.
e. Each of the firms acts as a mini monopoly in the market.
d
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The Phillips curve trade-off relationship implies that
A) there is no relationship between inflation and unemployment, at least in the long run. B) the government can fine-tune the economy and generate both the natural rate of unemployment and zero inflation. C) the government can fine-tune the economy and pick the most preferred combination of unemployment and inflation. D) low unemployment can be obtained only by generating rapidly increasing inflation.
Which of the following is a residual reward that accrues to business decision makers who use resources so as to increase their value?
a. opportunity cost b. earnings of employees c. economic profit d. interest earnings of corporate bondholders