Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 13 - Monopolistic Competition and Oligopoly - Discussion Questions: 5

Answer

The answer is below.

Work Step by Step

a) The first part is true, for there is a lot of criticism of monopolistic competition. However, this has very little to do with their profit: many businesses make profits and are not as criticized as monopolies. b) This is true, for close substitutes can drive down prices. After all, even though they may not be as good, if substitutes are cheap enough, people may choose them anyway.
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