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Author Question: Monopolistic competition is like monopoly with entry. Indicate whether the statement is true or ... (Read 40 times)

DyllonKazuo

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on: Jul 1, 2018
Monopolistic competition is like monopoly with entry.
 
  Indicate whether the statement is true or false

Question 2

A monopoly will always sell rather than rent its product.
 
  Indicate whether the statement is true or false


jessicaduplan

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Reply #1 on: Jul 1, 2018
Answer to Question 1

T Each firm has some monopoly power but entry can occur to drive profit to zero.

Answer to Question 2

F If the product is durable, consumers may fear the monopolist who sells it will keep lowering the price, causing the value of their purchase to decline. So they may refuse to buy. If the monopolist rents, this avenue of lowering price to discriminate is no longer an option in that the monopoly will suffer any negative effects of doing so. Consumers realize this and by renting the monopolist may win their business.


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