The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-The market structure called monopolistic competition is named using both monopoly and perfect competition. Why?
A)There are few firms in the market all producing identical products.
B)There is just one firm whose product can be easily differentiated.
C)There are a huge number of firms selling identical products at the same price.
D)There are many firms with easy entry and exit but each firm sells a unique product.
E)Firms spend very little on advertising and promotion and thus are price takers.

Question

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-The market structure called monopolistic competition is named using both monopoly and perfect competition. Why?
A)There are few firms in the market all producing identical products. 
B)There is just one firm whose product can be easily differentiated. 
C)There are a huge number of firms selling identical products at the same price. 
D)There are many firms with easy entry and exit but each firm sells a unique product. 
E)Firms spend very little on advertising and promotion and thus are price takers.

Quizplus · Accepted Answer

Monopolistic competition is named after both monopoly and perfect competition because it has some characteristics of both. Like perfect competition, there are many firms with easy entry and exit. However, each firm sells a unique product, like in a monopoly. This means that firms have some market power to set their prices, but also have competition from similar products in the market.

The Figure Given Below Shows the Cost and Revenue Curves