Micro_tutorial_9

Which of the following is a key characteristic of monopolistic competition?

• A single seller dominates the market.

• Firms produce identical products.

• Many firms sell differentiated products.

• High barriers to entry prevent competition.

What is the long-run equilibrium outcome in monopolistic competition?

• Firms earn positive economic profits.

• Firms incur economic losses.

• Firms earn zero economic profit.

• Firms form cartels to maximize profits.

What allows firms in monopolistic competition to have some market power?

• Product differentiation

• Perfect substitutes

• High barriers to entry

• Government regulation

In monopolistic competition, what causes firms to enter the market?

• High barriers to entry

• Positive economic profits

• Negative economic profits

• Absence of market demand

Which of the following is NOT a form of product differentiation?

• Differentiation by type or style

• Differentiation by location

• Differentiation by quality

• Differentiation by price

Why do firms in monopolistic competition engage in advertising?

• To reduce production costs

• To inform consumers and emphasize product differentiation

• To achieve economies of scale

• To eliminate competitors

In the short run, monopolistically competitive firms can:

• Earn positive economic profits.

• Earn negative economic profits.

• Break even.

• All of the above.

What happens when new firms enter a monopolistically competitive market?

• Existing firms experience increased demand.

• Demand for existing firms' products shifts left.

• Existing firms increase prices.

• Barriers to entry increase.

What does the downward-sloping demand curve in monopolistic competition indicate?

• Firms are price takers.

• Firms have some control over pricing.

• Demand for the product is perfectly elastic.

• There are no substitutes for the product.

What is the main difference between monopolistic competition and perfect competition?

• Number of firms

• Type of products

• Market power

• Both b and c