Monopoly and Monopolistic Competition

A monopoly is a

• Price minimizer

• Price maximizer

• Price taker

• Prace maker

Compared to the competitive firm, the monopoly

• Is less efficient

• Is more efficient

• Is equally efficient

• Has higher consumer surplus

In order to maximize profits, monopolies

• Decrease price

• Decrease cost

• Decrease quantity

• Increase quantity

The demand curve a monopoly faces is

• Upward sloping

• Downward sloping

• Flat

• Perfectly inelastic

A monopoly

• Produces at efficient scale

• Exhausts production capacity

• Sets price equal to average variable cost

• Sets the price above average total cost

According to academic studies, pharmaceutical monopolies when they grow

• Increase R&D

• Decrease R&D

• Become more innovative

• Become less competitive

Monopolistic competition in the long run

• Drives economic profit to zero

• Drives accounting profit to zero

• Allows for some economic profit

• Drive price equal to total cost

Monopolistically competitive firms

• Produce at minimum average total cost

• Produce at constant return to scale

• Are economies of scale

• Are diseconomies of scale

Monopolistic competition has a greater product variety

• Because of globalisation

• Because of increased competition

• Because of the consumer preference for variety

• Because of reduced cost

A monopolistically competitive firm faces

• The firm's demand curve

• The market demand curve

• A flat demand curve

• An upwards sloping demand curve