Question

1. Which of the following is a characteristic of monopolistic competition?
a. Many sellers.
b. A differentiated product.
c. Free entry into and exit from the market
d. All of the above

2. Marginal revenue is equal to price for which one of the following types of market structure?
a. Monopoly
c. Oligopoly
b. Perfect Competition
d. Monopolistic Competition

Answer 1

Answer:

Question 1: D

Question 2: B

Answer 2

The characteristics of a monopolistice competition are :

• many sellers
• a differentiated product
• free entry into and exit from the market

Monopolistic Competition

Monopolistic competition may be defined as a competition in the market where many producers compete against one another.

Each seller sells differentiated products which are not the perfect substitutes.

In a monopolistic competition, the barrier to entry and exit the market are very low.

1. Hence the correct answer is option (d). All the above.

2. Marginal revenue is equal to price for perfect competition in a market structure.

The correct option is (b).

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