When an industry has many firms, the industry is
a. an oligopoly if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products.
b. an oligopoly if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products.
c. monopolistically competitive if the firms sell differentiated products, but it is perfectly competitive if the firms sell identical products.
d. perfectly competitive if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products.
c
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What is the more efficient choice: sending one's child to John Q. Public High School at zero dollar tuition or to Purebred Prep School at several thousand dollars a year?
A) High school, because it's much cheaper. B) Prep school, because it's much higher in quality of instruction. C) Prep school, because what matters most is not what you know, but who you know. D) It depends on the decision makers' own evaluations of cost and benefit.
In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A) when there are very few close substitutes for the item B) when there are very few producers of the item C) when the item's share of expenses in consumers' budgets is very small D) when there is considerable time to adjust to a change in the price of the item