Multiple Choice QuestionA monopolistically competitive firm may be able to continue earning greater than a normal profit in the long run Blank______.Multiple choice question.by decreasing varietyby not spending on advertisingthrough further product differentiationby standardizing its product
Question
Multiple Choice QuestionA monopolistically competitive firm may be able to continue earning greater than a normal profit in the long run Blank______.Multiple choice question.by decreasing varietyby not spending on advertisingthrough further product differentiationby standardizing its product
Solution
The correct answer is "through further product differentiation".
In a monopolistically competitive market, firms can continue earning greater than normal profit in the long run through further product differentiation. This is because by making their product different and more attractive than the competitors, they can attract more customers and thus, increase their sales and profits. This is not possible through decreasing variety, not spending on advertising, or by standardizing its product as these actions may not make the product more attractive to the customers.
Similar Questions
Multiple Choice QuestionIn long-run equilibrium, monopolistically competitive firms will show a(n) Blank______.Multiple choice question.above-normal profitnormal profitincreasing lossbelow-normal profit
Multiple Choice QuestionWhich of the following factors is most likely to help a monopolistically competitive firm postpone earning only a normal profit?Multiple choice question.New competitorsPrice cuttingMinimal advertisingProduct differentiation
Multiple Choice QuestionMonopolistically competitive firms to engage in Blank______ competition by means of product differentiation and advertising, which makes the market situation complex.Multiple choice question.unproductivepricenonpricepure
Multiple Choice QuestionA(n) Blank______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.Multiple choice question.oligopolistic firmmonopolistically competitive firmperfectly competitive firmmonopoly
Multiple Choice QuestionMarket segregation must exist in order for a monopolist to Blank______.Multiple choice question.prevent entry of new firmsbe a natural monopolyprice discriminateimprove technologies
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.