Question

1)

Part 1 of 7- Question 1 of 11 0.25 P Which of the following is NOT a characteristic of a monopolistically competitive market? O A. Easy entry into and exit from the industry O B. Homogeneous products ° C. Some price-setting power O D. Many firms se L Mark for Review What's This?

2&3) Explain.

4&5)) Explain.

6&7)Explain.

8&9)Explain.

10)

Answer 1

1) Option (B) is the correct answer.

Because in monopolisticaly competitive markets, there will be a imperfect competition where there will be many producers who sells differentiated products to consumers.

2&3) True.

Because advertising or promotion will help to capture the business.

Advertising in the monopolistic competition market will help the producers to sell their differentiated products. As advertising will help to generate awareness about their newer differentiated product.

4&5) Option (A) is the correct answer. Highly Elastic.

Because there will be many firms and the market power is low. So demand will be highly elastic in the long run. Main factor which influences the demand elasticity is price. In this case, firms are price setters and there are multiple products available in the market. So demand will be highly elastic.

6&7) Option (D) is the correct answer.

Because any quantity exceeding or lower than the competitor firm cannot be right option as the prices do vary among the players.

8&9) Option (C). Zero Economic Profit.

Because in the long run, demand for the monopolistically compatetive firms will get reduced and so is the profit. So they can only generate breakeven in the long run.

10) Option (A) is thecorrect answer.

Because the price they change is equal to Marginal cost to make profits. They are price setters.