How is monopolistic competition like perfect competition? How is it like monopoly?
What will be an ideal response?
Monopolistic competition is like perfect competition in that there are many buyers and sellers and it is easy for firms to enter and exit the industry. But it is like monopoly in that firms face downward sloping demand curves. The demand curves slope down because the product is not homogeneous, so the product of one firm is not a perfect substitute for the product of another firm.
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Potential output is
A. the level of real GDP that exists when the economy is experiencing only frictional and cyclical unemployment. B. the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded. C. the level of real GDP that exists when the actual rate of unemployment is zero. D. the level of real GDP that exists when the economy is experiencing only cyclical and structural unemployment.
Refer to Table 14-8. If the firms cooperate, what prices will they select?
A) Brawny Juice will select a low price; Power Fuel a high price. B) Both firms will select a high price. C) Brawny Juice will select a high price; Power Fuel a low price. D) Both firms will select a low price.