Is my answer correct? **Question:**Which of the following statements is *false*?**Options:**- **a.** The monopolistic competitor produces an output at which price is greater than marginal cost.- **b.** The monopolistic competitor is a price searcher.- **c.** There are many substitutes in a monopolistic competitive industry.- **d.** The demand curve facing a monopolistic competitor is less elastic than the demand curve facing a monopolist.**Explanation:**The question asks which statement is incorrect regarding characteristics of monopolistic competition. Generally, in a monopolistic competitive industry, there are numerous firms and product differentiation, leading to many substitutes, making option **c** false. Other options highlight correct aspects of monopolistic competition, such as price setting above marginal cost, price searching, and varying elasticity in demand curves.

In monopolistic competition, a corporation accepts the pricing of its competitors as given and ignores the impact of its own prices on the prices of others. If this occurs in the context of coercive government, monopolistic competition will be transformed into a government-granted monopoly. The company, unlike ideal competition, keeps spare capacity. Industries are frequently modelled using monopolistic competition models. Restaurants, cereal, apparel, shoes, and large-city service industries are examples of industries having market structures that are akin to monopolistic competition. A monopolistically competitive market has nearly identical long-run characteristics as a fully competitive market.Option A: This option is incorrect because in a monopolistically competitive market, the price is higher than the marginal cost of producing the good or service, and the providers have pricing power. This reduces the consumer surplus and, as a result, the market's economic surplus, resulting in deadweight loss.Option B: This option is incorrect because suppliers in monopolistic competitive marketplaces are price makers, much like monopolies, and will act similarly in the near term.Option C: This option is incorrect because monopolistic competition is a sort of imperfect competition in which multiple producers compete against one another by selling products that differ from one another (e.g., by branding or quality) yet are imperfect alternatives.Option D: This is the correct answer because substitutes exist, a monopolistically competitive firm's demand curve is more elastic than a monopoly with no close equivalents. If a monopolist raises its price, some customers will refuse to buy it, forcing them to buy something else.Thus, the correct answer is Option D.

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Economics

Which of the following statements is false? a. The monopolistic competitor produces an output at which price is greater than marginal cost. b. The monopolistic competitor is a price searcher. С. There are many substitutes in a monopolistic competitive industry. d. The demand curve facing a monopolistic competitor is less elastic than the demand curve facing a monopolist.

Which of the following statements is false? a. The monopolistic competitor produces an output at which price is greater than marginal cost. b. The monopolistic competitor is a price searcher. С. There are many substitutes in a monopolistic competitive industry. d. The demand curve facing a monopolistic competitor is less elastic than the demand curve facing a monopolist.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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