Which of the following is the most accurate description of industries?
A) A monopolistically competitive industry is more competitive than any other industry form.
B) Monopolies are more competitive than monopolistically competitive firms.
C) Monopolistically competitive firms are located between monopoly and perfect competition.
D) All firms can make a long-run economic profit,but only perfect competitors can make a short-run profit.
E) All firms engage in short-run loss minimization by selecting the point where marginal revenue equals price.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms are located between monopoly and perfect competition as they have some market power but also face competition from substitutes. A monopolistically competitive industry is less competitive than perfect competition but more competitive than a monopoly. Monopolies have no competition and therefore less incentive to innovate and keep prices low. The idea that all firms can make a long-run economic profit is incorrect as there are industries with barriers to entry that prevent new firms from entering and making a profit. Short-run loss minimization involves selecting the point where marginal revenue equals marginal cost, not price.

Which of the Following Is the Most Accurate Description of Industries