Which statement best explains why consumers might benefit more from monopolistic competition than perfect competition? O The demand curve for a monopolistically competitive firm follows the law of demand, but the demand curve for a perfectly competitive firm does not. Monopolistic competitors will use fewer resources per unit of output than perfect competitors, so overall output will be maximized. The benefits of having more variety offsets the losses from productive and allocative inefficiencies. The balance between marginal cost and price in monopolistic competition ensures that the optimal level of output will be produced.
Which statement best explains why consumers might benefit more from monopolistic competition than perfect competition? O The demand curve for a monopolistically competitive firm follows the law of demand, but the demand curve for a perfectly competitive firm does not. Monopolistic competitors will use fewer resources per unit of output than perfect competitors, so overall output will be maximized. The benefits of having more variety offsets the losses from productive and allocative inefficiencies. The balance between marginal cost and price in monopolistic competition ensures that the optimal level of output will be produced.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Monopolistic Competition
Section: Chapter Questions
Problem 3PA
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