Which one of the following helps to explain why profits are likely to be lower in a perfectly competitive market than in a monopoly market?
1 )
A firm with monopoly power doesn’t need to spend money on research and development to improve its products
2 )
Firms in a perfectly competitive market are more likely to experience diseconomies of scale
In a monopoly, a firm can increase the price of the product by limiting its output
4 )
In a perfectly competitive market, firms differentiate their products to compete with rivals and achieve brand loyalty
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