Question

Please answer the 3 following questions:

QUESTION 7 The meaning of interdependence in a monopolistically competitive market is that firms will not take into account the reaction of rival firms. that it is difficult for firms to get together to collude. that products produced by firms will be good substitutes. that price rigging commonly occurs. QUESTION 8 A good that entails relatively high fixed costs associated with the use of knowledge and other information-intensive inputs as key factors of production is O a persuasive good. an information product. O a logo good. O a search good. QUESTIONS Monopolistic competition is characterized by O a horizontal demand curve faced by all firms. O relative ease of entry into the market. O persistent long-run economic profits. a standard, undifferentiated product.

Answer 1

7. Option A.

In a monopolistically competitive market, there is no interdependence between the rival firms or between the competitive firms like in an oligopoly.

This is because, the actions of any firm are not dependent on the reactions of their rival firms.

8. Option B.

A product is said to be informative if it entails all the details or information about it.

It may contain information about the various factors of production used to produce it or the cost incurred by firms in producing it.

9. Option B.

A monopolistically competitive market is a market where the firms sells similar products.

The firms engage in a competition as they are characterized by the relative ease of entry in the market.

This allows firms to enter and exit the market freely whenever they want.