MONOPOLISTIC COMPETITION AND OLIGOPOLY

Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition? 

• In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition. 
• In perfect competition there are many firms, but in monopolistic competition there are only a few firms. 
• In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product. 
• In perfect competition there are few consumers, but in monopolistic competition there are many consumers. 

What differs monopolistic competition from perfect competition?

• product differentiation

• long-run inefficiency

• barriers to entry

• the short-run profits and losses possibility

In monopolistic competition producers....

• have a full ability to set prices

• have some ability to set prices

• have no ability to set prices

Which one of the following statements is not a characteristic of monopolistic competition?

• Ease of entry into the industry

• Product differentiation

• A relatively large number of sellers

• A homogenous product

Which of the following industries is the best example of monopolistic competition?

• Wheat

• Restaurant

• Automobile

• Water service

What type of products will firms produce in monopolistic competition?

• Firms produce significantly differentiated products

• Firms produce slightly differentiated products

• Firms produce homogenous products with one modification

• Firms produce a variety of different products

How can products be differentiated?

• Brand name

• Colour

• Appearance

• Packaging design

• All of the above

which one of these is NOT an assumption of the monopolistic competition?

• there are many firms

• the firms are relatively small

• the products the firms supply are indistinguishable

In order to increase their profit, the producers in the monopolistic competition...

• can increase their price however they want

• can increase their price to some degree

• can reduce the quantity supplied

• none of the answers are correct

The demand in the monopolistic competition is

• perfectly elastic

• perfectly inelastic

• elastic

• inelastic