Monopolistically competitive industries differ from monopolies in that monopolistically competitive industries:

a. will feature free entry and exit of firms from the industry in the short-run.

b. involve many firms, each of whom have no power to change the market price with their output decisions.

c. will feature free entry and exit of firms from the industry in the long-run.

d. involves many firms, each of whom has some ability to change the market price by changing its level of output.

Question

Chaya

Business

5 June, 23:55

Monopolistically competitive industries differ from monopolies in that monopolistically competitive industries:

a. will feature free entry and exit of firms from the industry in the short-run.

b. involve many firms, each of whom have no power to change the market price with their output decisions.

c. will feature free entry and exit of firms from the industry in the long-run.

d. involves many firms, each of whom has some ability to change the market price by changing its level of output.

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Answers (1)

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Derrick Melendez · Answer 1

The correct answer is letter "D": involves many firms, each of whom has some ability to change the market price by changing its level of output.

Explanation:

Monopolistic Competition exists in industries that have many firms that offer similar products or services for example restaurants, supermarkets, and clothing stores. In monopolistic competition, those products or services are not perfect substitutes from one another. The firms can change market prices by changing the levels of production.

A monopoly occurs when a company is the sole or nearly sole provider of a good or service within an industry. It causes the firm the be the only one making the decisions in changing prices at will.