Statement I: The absence of significant barriers to entry ensures that long run profits will be competed away for the monopolistic competitor.
Statement II: Providing better service,ambience,or a convenient location are all forms of price discrimination.

A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.

Question

Christina Malla · Accepted Answer

Final Answer : A, Explanation :  Statement I is true as it is a key feature of monopolistic competition that the absence of significant barriers to entry leads to firms competing away profits in the long run. Statement II is false as providing better service, ambiance, or a convenient location are not forms of price discrimination, but rather ways in which firms can differentiate their products or services from competitors. Price discrimination refers specifically to charging different prices for the same product or service to different customers.

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