Multiple Select QuestionSelect all that applyMonopolistic competition normally consists of 25 to 75 firms rather than hundreds or thousands and involves which of the following characteristics?Multiple select question.restriction of outputindependent actionno collusionsmall market sharesstandardized products
Question
Multiple Select QuestionSelect all that applyMonopolistic competition normally consists of 25 to 75 firms rather than hundreds or thousands and involves which of the following characteristics?Multiple select question.restriction of outputindependent actionno collusionsmall market sharesstandardized products
Solution
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from one another. The characteristics of monopolistic competition include:
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Independent Action: Each firm in a monopolistic competition structure acts independently of its competitors. They have some power to set their own prices, as they are not price takers like in perfect competition.
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Small Market Shares: In monopolistic competition, firms have a small market share. No single firm has a significant influence on market price.
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No Collusion: Firms in a monopolistic competition market structure do not collude with each other. They make their own independent decisions regarding output and pricing.
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Standardized Products: This is not a characteristic of monopolistic competition. In fact, one of the key features of monopolistic competition is product differentiation. Each firm makes a product that is slightly different from the products of other firms.
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Restriction of Output: This is not typically a characteristic of monopolistic competition. Firms in monopolistic competition tend to produce at a level where marginal cost equals marginal revenue, not where they restrict output to increase prices.
So, the characteristics of monopolistic competition from the given options are independent action, no collusion, and small market shares.
Similar Questions
Multiple Select QuestionSelect all that applyWhich of the following are typical characteristics of monopolistic competition?Multiple select question.No collusionMutual interdependenceSmall market shareIndependent actionFew firms
Multiple Select QuestionSelect all that applyWhich of the following are the main characteristics of a pure monopoly?Multiple select question.Control over the pricePresence of a single sellerAvailability of multiple substitutes of its productsEase of entry for other firmsUnavailability of close substitutes for its productsBlocked entry for other firmsPresence of at least two sellers
Multiple Select QuestionSelect all that applyFirms in monopolistic competition produce goods with Blank______.Multiple select question.varying degrees of customer serviceno fear of losing market share to new firmsstandardized qualitiesslightly varying physical characteristics
Multiple Select QuestionSelect all that applyWhich of the following are entry barriers created by monopolists?Multiple select question.Collaboration with governmentImposition of tariffs and quotasPrice reductionsIncreased advertising
ultiple Select QuestionSelect all that applyIn the long run, a monopolistic competitor fails to achieve which of the following?Multiple select question.Excess capacityProductive efficiencyAllocative efficiencyA normal profit
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