Monopolistic Competition

Monopolistic Competition

by Kendrick Broadus

Multiple Choice

One of the assumptions of monopolistic competition is that it is made of a ...... number of firms

• large

• small

• moderate

Multiple Choice

In the short run, in monopolistic competition, the producers produce at a level of output that is...

• productively efficient

• allocatively efficient

• profit maximizing

Multiple Choice

The product differentiation is also known as....

• price competition

• non-price competition

• economics of scale

• price discrimination

Multiple Choice

In the long run all firms are making

• abnormal profit

• normal profit

• losses

Multiple Choice

Short-run losses encourage firms to...

• enter the industry

• leave the industry

• stay in the industry

Multiple Select

What differs monopolistic competition from perfect competition?

• product differentiation

• long-run inefficiency

• barriers to entry

• the short-run profits and losses possibility

Multiple Choice

Monopolistic competition is a market structure in which few firms sell similar products

• True

• False

Multiple Choice

Product differentiation refers to

• Features that make one product appear different from competing products in the same market.

• The selling of identical products in different markets.

Multiple Choice

An industry consists of 100 small firms, and the largest firm accounts for only 2 percent of sales. Brand names are considered a signal of quality. The industry described is best classified as

• Monopoly

• Perfect Competition

• Monopolistic Competition

• Oligopoly

Multiple Choice

A well-known fast-food franchise substantially increases the price of its hamburgers, and loses only some of its customers. Which of the following best explains why the franchise has not lost all of its customers

• Its hamburgers are a perfect substitute for other types of fast food.

• Its hamburgers are differentiated.

• The demand for its hamburgers is perfectly elastic.

• The other competitive fast-food restaurants decrease the price for their hamburgers.

Multiple Choice

Which of the following is true of a monopolistically competitive firm in long-run equilibrium?

• Price is greater than marginal cost, and marginal revenue is equal to average total cost.

• Price is greater than marginal revenue, and marginal cost is equal to average total cost.

• Price is greater than marginal revenue, and marginal cost is greater than average total cost.

• Marginal revenue is equal to marginal cost, and price is equal to average total cost.