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A characteristic of monopolistic competition is a. a low ratio of fixed to variable costs. b. product differentiation. c. a high capital-output ratio. d. the absence of advertising.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 4QCMC

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Question

A characteristic of monopolistic competition is a. a low ratio of fixed to variable costs. b. product differentiation. c. a high capital-output ratio. d. the absence of advertising.

Definition Definition Form of market structure in which there are a large number of sellers of a particular product, with each seller selling somewhat differentiated but close substitutes to the product sold by other sellers. Features of monopolistic competition include: Large number of buyers and sellers Differentiated products Free entry and exit of the firms in the market

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