In a certain monopolistically competitive market that is cha

In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise, if a firm\'s competitors begin to successfully introduce new products that cut into the firm\'s market share, the firm\'s best counter- strategy is to: introduce few new products in order to meet competitors head on. reduce its advertising budget in order to save costs. look to the government for protection. ignore its competitors and hope its customers\' loyalty carry it through the threat. raise prices in order to increase the revenue. Question 17 4 pts Which of the following is true of the model of monopolistic competition? OThe monopolistically competitive firms enjoy a greater market power than a monopolist. Firms tend to locate near each other in order to minimize total travel costs for consumers The number of firms declines over time as a result of economies of scale. Barriers to entry enable firms to enjoy positive profits in the long run. The firms end up charging same prices for their individual products.

Solution

Q.16 Option 1. Monopolistically competitive market sell slightly differentiated good, hence in order to compete it should introduce few new products
Q.17 Option 1. Because of increased competition, the profit reduces and uncompetitive firms opt to out of the business
Q.20. False. It is at where MC=MR and reaches the demand curve
Q.21. Option 5. As it damages the society and incurs cost for the residents to get cured