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Author Question: Monopolistic competition and perfect competition differ because A) only monopolistically ... (Read 49 times)

rl

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on: Jul 1, 2018
Monopolistic competition and perfect competition differ because
 
  A) only monopolistically competitive firms will set MR = MC.
  B) only perfectly competitive firms will set MR = MC.
  C) only monopolistic competition allows for entry of other firms in the long run.
  D) only competitive firms take the price as given.

Question 2

If an incumbent threatens to retaliate against entry, but its profits are greater under accommodated entry than under the proposed threat, potential entrants will ignore the threat.
 
  What will be an ideal response?
Microeconomics ¦ Perloff ¦ 8th Edition
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l.stuut

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

D

Answer to Question 2

True. The threat is not credible since the incumbent firm is better off accommodating entry than retaliating.


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