Asked by
Jessica Anhalt
on Nov 16, 2024
Verified
The fact that monopolistically competitive firms charge a price that exceeds marginal cost is responsible for the
A) product-variety externality that is observed in monopolistically competitive markets.
B) inefficiencies of the long-term losses earned by monopolistically copmetitive firms.
C) business-stealing externality that is observed in monopolistically competitive markets.
D) persistence of positive profits into the long run for monopolistically competitive firms.
Marginal Cost
The expenditure required to produce one more unit of a particular product or service.
Monopolistically Competitive
A market structure characterized by many firms, differentiated products, and free entry and exit, allowing firms some control over price while still competing on quality, branding, and price.
Externality
A cost or benefit that affects a third party who did not choose to incur that cost or benefit.
- Analyze the consequences of monopolistic competition for welfare, taking into account both its negative aspects and external influences.
Verified Answer
IE
Learning Objectives
- Analyze the consequences of monopolistic competition for welfare, taking into account both its negative aspects and external influences.