Read each statement below and label it as true or false. 1. A monopolistic competitor, much like
Question:
Read each statement below and label it as true or false.
1. A monopolistic competitor, much like a firm in perfect competition, sells its product at a point where price is equal to marginal cost.
2. Advertising can play a role as an indirect signal of product quality to customers.
3. Monopolistically competitive industries are more likely to make use of advertising to create products that catch on in mainstream popularity than industries in perfect competition.
4. In the long run, monopolistic competitors make a similar amount of profit to monopolists, since in both cases the firm demand curves are downward sloping, and at the profit maximizing point marginal cost is equal to marginal revenue.
5. In the short term, a monopolistic competitor will make a profit if the demand curve is above the average total cost curve at some point.
Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander