Asked by Amanda Leigh on Mar 10, 2024
Verified
If the Boston doughnut market is monopolistically competitive and the firms are earning short-run profits,consumers in Boston will see less diversity in the doughnuts offered over time.
Monopolistically Competitive
A market setup where numerous companies offer products that are closely related but not exactly the same, permitting a level of market control and the ability to distinguish their offerings.
Short-Run Profits
Earnings that occur when a firm can cover its variable costs, occurring in a period short enough that at least one input is fixed.
Diversity
The representation and inclusion of individuals from a variety of backgrounds, perspectives, and experiences in a group or organization.
- Analyze the implications of monopolistic competition on consumer choice and product diversity.
Verified Answer
WB
Whitney BaxleyMar 10, 2024
Final Answer :
False
Explanation :
In a monopolistically competitive market, firms differentiate their products to attract consumers. Therefore, even if firms are earning short-run profits, they will still strive to offer diverse products to maintain their competitive edge.
Learning Objectives
- Analyze the implications of monopolistic competition on consumer choice and product diversity.