Statement I: The absence of significant barriers to entry ensures that long run profits will be competed away for the monopolistic competitor.
Statement II: Providing better service,ambience,or a convenient location are all forms of price discrimination.

Question

Quizplus · Accepted Answer

Statement I is true as it is a key feature of monopolistic competition that the absence of significant barriers to entry leads to firms competing away profits in the long run. Statement II is false as providing better service, ambiance, or a convenient location are not forms of price discrimination, but rather ways in which firms can differentiate their products or services from competitors. Price discrimination refers specifically to charging different prices for the same product or service to different customers.

Statement I: the Absence of Significant Barriers to Entry Ensures