A. New firms will enter a monopolistically competitive market if (marginal reven
ID: 1124624 • Letter: A
Question
A. New firms will enter a monopolistically competitive market if
(marginal revenue, price) is greater than (average total cost, marginal cost).
(Circle the correct answer for each.)
B. Consider perfect competition and monopolistic competition when answering
the following questions:
State one way in which they are different.
State one way in which they are the same.
C. Consider monopoly and monopolistic competition when answering the
following questions:
State one way in which they are different.
State one way in which they are the same.
Explanation / Answer
A) Under Monopoly theory of market assumes that new entry firm is not allowed in both long and short run
B) Similarity between Perfect competition and Monopoly market
Both the markets firms will produce output level where marginal cost equals marginal revenue
C) Monopoly market firm will produce single good and there is no substitute for that goods, under Monopolistic market firms will produce differentiated goods and there is exist substitution for these goods
both the market firms will produce optimum output level where marginal cost equal to marginal revenue.