Explain the characteristics of monopolistic competition. Explain how price and output are determined in monopolistic competition. Illustrate your answer with a graph
What will be an ideal response?
The characteristics of monopolistic competition are: a large number of firms, no barriers to entry, and product differentiation. The monopolistic competitor determines how much output to produce by equating marginal cost and marginal revenue. Price is determined by the demand curve.
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If the ratio of the dollar price of a U.S. toy to the dollar price of a Chinese toy is greater than one:
A) retailers in the U.S. should buy the toys from Chinese suppliers. B) retailers in the U.S. should buy the toys from both Chinese suppliers and American suppliers. C) retailers in the U.S. should not buy the toys from both Chinese suppliers and American suppliers. D) retailers in the U.S. should buy the toys from American suppliers.
The amount of income a consumer has to spend on goods and services is known as
A) wealth. B) a budget constraint. C) purchasing power. D) effective demand.