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Practice mode Monopoly & Competition

Which of these products is least likely to be sold in a monopolistically competitive market?

Correct answer C. Cotton

Explanation

Monopolistic competition involves differentiated products; raw cotton is a standardised commodity sold in a near perfectly competitive market rather than as a branded good.

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Question 03 Monopoly & Competition

What is one source of inefficiency in monopolistic competition?

Correct answer D. Since price is above marginal cost, some units that buyers value in excess of their cost of production are not produced, causing a deadweight loss

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Question 04 Monopoly & Competition

In the term “monopolistic competition”, what does the word “competition” refer to?

Correct answer C. There are many sellers in a monopolistically competitive market and there is free entry and exit, just like a competitive market

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