Asked by Jasmine Simpson on May 11, 2024
Verified
Which of the following features distinguishes monopolistically competitive firms from monopolies and oligopolies?
A) Monopolistically competitive firms cannot influence market price by virtue of their size alone while monopolies and oligopolies can.
B) Monopolistically competitive firms are not constrained by market demand while monopolies and oligopolies are.
C) Monopolistically competitive firms are price takers while monopolies and oligopolies are not.
D) Monopolistically competitive firms sell a homogeneous product while monopolies and oligopolies sell a differentiated product.
Homogeneous Product
A product that is considered the same across different producers, making it indistinguishable in the eyes of the consumer.
Differentiated Product
A product that is distinct from its competitors by virtue of unique features, benefits, or quality.
- Differentiate between monopolistic competition, perfect competition, monopoly, and oligopoly based on features such as influence on price, product differentiation, and barriers to entry.
Verified Answer
RA
Rythm AgarwalMay 12, 2024
Final Answer :
A
Explanation :
Monopolistically competitive firms have many competitors and each firm has a relatively small market share, so they cannot influence market price by their size alone. In contrast, monopolies and oligopolies can influence prices due to their significant control over the market.
Learning Objectives
- Differentiate between monopolistic competition, perfect competition, monopoly, and oligopoly based on features such as influence on price, product differentiation, and barriers to entry.
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