Which statement is true?A) The monopolistic competitor breaks even in the long run.B) The monopolistic competitor operates at an output that is less than peak efficiency.C) The monopolistic competitor has a small influence on price because its products are differentiated.D) Monopolistic competitors have very elastic demand curves.E) All of the choices are true.

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Vasilis Tsigaridas · Accepted Answer

Final Answer : E, Explanation :  All the statements accurately describe characteristics of monopolistic competition. A) Firms in monopolistic competition can break even in the long run due to the entry of new competitors. B) They do not operate at peak efficiency because they do not produce at the minimum of the average cost curve. C) They can influence their prices due to product differentiation, even though this influence is relatively small compared to a monopoly. D) Their demand curves are not perfectly elastic because of product differentiation, but they are more elastic than those of a monopolist due to the availability of close substitutes.

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