CA Foundation Exam > CA Foundation Questions > Which of the following is true about monopoli...
Start Learning for Free
Which of the following is true about monopolistic competition?
- a)AR < MR
- b)AR > MR
- c)AR = MR
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following is true about monopolistic competition?a)AR <...
Answer: BExplanation:In monopolistic competition, the following is true:- AR > MR (Average Revenue is greater than Marginal Revenue)This situation occurs due to the following reasons:
- Downward Sloping Demand Curve: In monopolistic competition, there is a downward sloping demand curve. This means that in order to sell more units of a product, the firm has to lower the price. This results in a decrease in marginal revenue.
- Product Differentiation: Firms in monopolistic competition differentiate their products from their competitors'. This differentiation allows firms to have some degree of market power and charge a higher price than their marginal cost, resulting in a higher average revenue.
- Price Elasticity of Demand: In monopolistic competition, the demand for a firm's product is relatively elastic due to the presence of close substitutes. This means that a decrease in price leads to a proportionately larger increase in quantity demanded, resulting in a lower marginal revenue.
Free Test
FREE
| Start Free Test |
Community Answer
Which of the following is true about monopolistic competition?a)AR <...
Monopolistic competition refers to a market structure where there are many firms selling differentiated products. Each firm has some degree of market power, allowing it to set its own price. The following statement about monopolistic competition is true:
a) AR (Average Revenue) is downward sloping but not perfectly elastic. This means that as a firm increases its price, it will sell fewer units of its product, but not all consumers will switch to alternative products.
a) AR (Average Revenue) is downward sloping but not perfectly elastic. This means that as a firm increases its price, it will sell fewer units of its product, but not all consumers will switch to alternative products.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer?
Question Description
Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer?.
Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which of the following is true about monopolistic competition?a)AR < MRb)AR > MRc)AR = MRd)None of theseCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup