Which of these is NOT a characteristic of a monopolistically competitive firm?

• There are many sellers

• Firms sell differentiated products

• There is free entry and exit

• Prices are set by the buyer

Which of these is the profit maximization equation of the monopolistically competitive firm in the short run?

• MR = MC

• MR = P

• MR < MC

• MR < P

Which of these is the equation for economic profit?

• Variable cost + Fixed cost

• Marginal revenue - Marginal cost

• Accounting profit + Opportunity cost

• Revenue - Total costs

When new firms enter the monopolistically competitive market, which of the following obtains a positive externality?

• Competitors

• Customers

• Government

• Suppliers

Which of these CANNOT be used by the firm to signal their product's quality?

• Brand Name

• Costing

• Advertising

• Packaging

Which of these is the production quantity that minimizes the average total costs of the firm?

• Efficient scale of the firm

• Minimum cost requirement

• Cost saving production

• Effective production rate

Which of these describes the price of monopolistic competition?

• It is above marginal revenue

• It is above marginal cost

• It is below marginal revenue

• It is below marginal cost

Which of these is NOT a possible effect of advertising?

• Promotes brand loyalty

• Incentive to maintain quality

• Lowers prices

• Stops product development

How do increasing profits affect monopolistically competitive firms in the long run?

• Firms will exit the market

• Firms will develop fewer products

• Firms will enter the market

• Firms will increase costs

To earn a profit in the short run, how should the monopolistically competitive firm set its price?

• equal to marginal costs

• equal to average costs

• above marginal costs

• above average costs