Monopolistic Competition Quiz

Which of the following is most likely produced in a monopolistically competitive market?

• ethernet cords

• autos

• fast food

• oil

• local phone services

Monopolistic competition is distinguished from perfect competition in that monopolistic competitors produce

• a homogeneous product

• a homogeneous but unique product

• identical products

• differentiated products

• products similar to those produced by a monopoly.

In which of the following market structures is a firm most likely to advertise extensively and fear entry of new firms?

• perfect competition

• pure monopoly

• monopolistic competition

• oligopoly

A monopolistic competitor’s demand curve is

• perfectly elastic

• less elastic than a monopolist’s or oligopolist’s but more elastic than a perfect competitor’s

• as elastic as an oligopolist’s

• more elastic than a monopolist’s or oligopolist’s but less elastic than a perfect competitor’s

• perfectly inelastic

Through advertising and product differentiation, a monopolistic competitor’s demand curve becomes:

• perfectly elastic

• less elastic

• as elastic as perfectly competitive

• more elastic

• perfectly inelastic

Through advertising and product differentiation, a monopolistic competitor’s demand curve:

• shifts to the right

• kinks

• shifts to the left

• stays the same

• none of the above

A monopolistically competitive firm can raise price somewhat by means of

• barriers to entry

• product similarity

• high tariffs

• its homogeneous products

• product differentiation

A fall in demand for the output of a monopolistically competitive industry is likely to cause which of the following in the short run?

• economic losses for each firm

• a higher price for each firm’s output

• fewer firms in the industry

• more firms in the industry

• economic profit for each firm

In the long-run, a monopolistically competitive firm’s profit has a tendency to

• maximize

• rise above the normal profit

• converge to normal profit

• stay the same without any change

• none of the above

The effect of advertising on the demand of a monopolistically competitive firm is

• to provide information on the quality and price of the products

• to establish the market share of the firms in the monopolistically competitive industry

• to raise the demand curve of the firm in the monopolistically competitive market to a higher level

• to do a public relation campaign for the monopolistically competitive industry.