Question

MULTIPLE CHOICE
1. In the long run in monopolistic competition:
a. economic profits are zero.
b. P = MC.
c. P = minimum ATC.
d. firms have an incentive to leave.
e. the demand curve is tangent to the MC curve.

2. The demand curve in monopolistic competition slopes downward because of:
a. strong barriers to entry.
b. product differentiation.
c. the small number of firms.
d. government regulation.
e. the similarities of the businesses.

Answer 1

1. a. economic profits are zero.
2. b. product differentiation.