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- Subject
- Monopoly & Competitioneconomics-mcqs › monopoly-competition
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Why does the term "competition" apply to the market structure known as "monopolistic competition"?
Multiple choice question for Monopoly & Competition. Select an option, then review the explanation below.
Explanation
The term "competition" in monopolistic competition highlights the presence of many sellers and the freedom for firms to enter or exit the market, much like in perfect competition. This distinguishes it from monopoly, where a single firm dominates. Other features, such as downward-sloping demand curves or product differentiation, do not define the "competition" aspect in this context.
More Monopoly & Competition MCQs
Practice related questions from the same subject.
- 1.Which of the following is NOT commonly cited as a criticism of advertising and brand names?
- 2.Which type of company is most likely to allocate a significant portion of its sales revenue to advertising?
- 3.In monopolistic competition, inefficiency arises because the price exceeds marginal cost, leading to some valuable units not being produced due to what reason?
- 4.Among the following types of businesses, which one is least motivated to invest in advertising?
- 5.In the short term, when a firm's price exceeds its average total cost in a monopolistically competitive market, what is the likely outcome?