In monopolistic competition, the presence of a large number of firms making a differentiated product means that
A) each firm can set the price of its particular product.
B) each firm must charge the same price.
C) the price is established by collusive behavior.
D) each firm must produce the same quantity.
E) firms cannot compete with each other on the basis of price.
A
You might also like to view...
Which of the following statements about the classical model of the economy is FALSE?
A) Individuals pursue the public interest, not their own self-interest. B) The economy will always move toward, or be at, full employment. C) Savings and investment will always be equal. D) Wages and prices are flexible.
The president of the Micro Brewing Corporation asks you, as the company economist, to forecast changes in consumer beer purchases associated with a proposed price change. You conduct a survey and find that if the price of a six-pack increases from $5.50
to $7.50, the quantity demanded will decrease from 2200 units to 1800 units a month. Should the Micro Brewing Corporation raise its price? Explain the economic basis for this recommendation to the president. Please provide the best answer for the statement.