In monopolistic competition, there are ________.
A) many firms selling products for which no good substitutes exist
B) many firms selling similar but slightly different products
C) many firms, each selling an identical product
D) a small number of firms, each selling an identical product
Question 2
Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the
A) greater the share of the tax paid by sellers.
B) smaller the deadweight loss from the tax.
C) larger the decrease in consumption because of the tax.
D) All of the above answers are correct.
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