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A monopolistically competitive industry is like a purely competitive industry in that:A. each industry produces a standardized productB. nonprice competition is a feature in both industriesC. neither industry has significant barriers to entry D. firms in both industries face a horizontal demand curve
One difference between monopolistic competition and pure competition is that:A. products can be standardized or differentiated in pure competition B. there is some control over price in monopolistic competition C. monopolistic competition has significant barriers to entry D. Firms differentiate their products in pure competition
Which set best describes the basic features of monopolistic competition?A. Easy entry, few firms, and standardized productsB. Barriers are to entry, few firms, and differentiated products C. Easy entry, many firms, and differentiated productsD. Barriers to entry, many firms, and standardized products
Demand and marginal revenue curves are downward sloping for monopolistically competitive firms because:A. there is free entry and exist B. product differentiation allows each firm some degree as monopoly power C. there are few large firms in the industry and each acts as a monopolist D. mutual interdependence among all firms in the industry leads to collusion.
A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4.00, marginal revenue is $2.50. This firm is operating:A. with a profit in the short runB. with a loss in the short runC. at the break-even level of output in the short run D. at an efficient level of output in the short run
Refer to the above graph representing an individual firm. In the short run, this monopolistically competitive firm will set price at:A. $65 and produce 45 units of output B. $65 and produce 35 units of output C. $50 and produce 35 units of outputD. $50 and produce 50 units of output
In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the firm:A. always earn an economic profit B. set price equal to marginal cost C. set price above marginal cost D. produce at minimum average total cost
If monopolistically competitive firms in an industry are making an economic profit, then:A. new firms will enter the industry and product demand will increase for the existing firms B. firms will exist the industry and product demand will decrease for the firms that remain C. firms will exist the industry and product demand will increase for the firms that remain. D. new firms will enter the industry and produce demand will decrease for the existing firms.
Refer to the above graph of a representative firm in monopolistic competition. What do lines 1,2,3, and 4 represent?A. Marginal cost, Average Total Cost, Marginal revenue, DemandB. Marginal cost, Average total cost, Demand, and Marginal Revenue C. Demand, Marginal revenue, Average total cost, and Marginal cost D. Average total cost, Marginal Revenue, Demand, and Marginal Cost
Suppose some firms exit a monopolistic competition industry. We would expect the demand curve of a firm already in the industry to:A. shift to the left B. shift to the right C. become more elastic D. remain the same since entering firms serve other customers in the market
Refer to the above graph. It represents a monopolistically competitive firm in a constant-cost industry. In long-run equilibrium this firm will:A. continue to each economic profits because it has monopolistic power to set its priceB. become a perfectly competitive firm because there are no significant barriers to entryC. break even because average total cost (ATC) and marginal cost (MC) will increase as more firms enter the market D. break even because its demand curve will fall and become more elastic as it loses sales to other firms entering the market
In the long-run, equilibrium, a profit-maximizing firm in a monopolistically competitive industry produces the quantity of output where:A. AC=P, MR = MC =PB. AC C. AC D. AC = P, MR = MC
Refer to the above graph of the representative firm in monopolistic competition. Marginal revenue and marginal cost intersect at point:A. aB. bC. cD. d
Monopolistic competition is characterized by excess capacity because:A. firms are always profitable in the long runB. firms charge a price that is less than marginal cost C. firms produce at an output level less than the least-cost output D. the demand for a product is perfectly elastic in this type of industry
Monopolistically competitive firms are productively inefficient because production occurs where:A. marginal cost is greater than marginal revenue B. marginal cost is less than marginal revenue C. average total cost is greater than the minimum average total cost D. average total cost is less than the difference between average total cost and average variable cost
Compared to pure competition, monopolistic competition:A. provides greater product differentiation at the cost of some excess capacity B. offers less product differentiation but attains equal productive efficiency C. provides greater product differentiation and achieves greater productive efficiency D. offers less product differentiation and lower productive efficiency
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