How do the characteristics of perfect competition and monopolistic competition differ?
What will be an ideal response?
In monopolistic competition, the products sold are similar but differentiated, thereby enabling firms to compete on the basis of product development and marketing to further differentiate their products. In perfect competition the products are identical, thereby eliminating the opportunity for firms to compete by differentiating their product.
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An increase in the price of oil will
A) shift the supply curve of oil to the left. B) shift the supply curve of oil to the right. C) leave the supply curve of oil unchanged. D) Not enough information to answer the question.
Answer the following statement(s) true (T) or false (F)
1. A parallel shift in the budget line is caused by changes in the relative prices of the two goods. 2. Parallel shifts in the budget line are considered when deriving the demand curve for a good. 3. An Engel curve shows the relationship between price and quantity demanded. 4. Normal goods have upward-sloping Engel curves. 5. If an Engel curve is downward sloping, then one of the two goods must be inferior.