ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the influence of government price supports
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the general weakness of the currency
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the ready availability of substitutes
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the low marginal cost of production
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Detailed explanation-1: -Which of these factors causes a monopolistically competitive firm to have little control over the price of its product? D. non-price competition. Which characteristic of non-price discrimination is most likely the reason why people choose to buy this watch?
Detailed explanation-2: -In monopolistic competition, supply and demand forces do not dictate pricing. Firms are selling similar, yet distinct products, so firms determine the pricing.
Detailed explanation-3: -Since there are substitutes, the demand curve facing a monopolistically competitive firm is more elastic than that of a monopoly where there are no close substitutes. If a monopolist raises its price, some consumers will choose not to purchase its product-but they will then need to buy a completely different product.
Detailed explanation-4: -A monopolistically competitive firm is not efficient because it does not produce at the minimum of its average cost curve or produce where P = MC. Thus, a monopolistically competitive firm will tend to produce a lower quantity at a higher cost and charge a higher price than a perfectly competitive firm.