Question 1

Which of the following most characterizes monopolistic competition?

Accepted Answer

A)  Price leadership.
B)  Product differentiation.
C)  Price discrimination.
D)  Economies of scale.

Question 2

Which of the following is true about a monopolistically competitive industry?

Accepted Answer

A)  Marginal cost pricing occurs.
B)  There is excess capacity.
C)  Resources are allocated efficiently.
D)  It produces at the minimum of ATC.

Question 3

Cross-price elasticity is very low in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 4

1, P1. B) Q2, P4. C) Q2, P1. D) Q4, P3." class="answers-bank-image d-inline" rel="preload" > Refer to Figure 26.1 for a monopolistically competitive firm.The profit-maximizing output and price combination for this firm in the short run is

Accepted Answer

A)  Q1, P1.
B)  Q2, P4.
C)  Q2, P1.
D)  Q4, P3.

Question 5

When new firms enter a monopolistically competitive industry, ceteris paribus, the

Accepted Answer

A)  Market price decreases.
B)  Market price increases.
C)  Market price remains unchanged.
D)  Change in market price cannot be determined based on the information given.

Question 6

The demand curve faced by a monopolistically competitive firm is

Accepted Answer

A)  Downward-sloping.
B)  Flat.
C)  Kinked.
D)  Upward-sloping.

Question 7

A major difference between monopoly and monopolistic competition is

Accepted Answer

A)  One maximizes profits by setting MR equal to MC, and the other does not.
B)  The number of firms in the market.
C)  One type of firm has market power, and the other does not.
D)  One has a downward-sloping demand curve, and the other does not.

Question 8

Which of the following characterizes monopolistic competition?

Accepted Answer

A)  Price leadership.
B)  Zero long-run profit.
C)  Retaliation.
D)  Marginal cost pricing.

Question 9

Which of the following market structures will have higher prices in the long run than perfect competition, ceteris paribus?

Accepted Answer

A)  Monopolistic competition and monopoly, but not oligopoly.
B)  Oligopoly and monopoly, but not monopolistic competition.
C)  Monopoly, but not oligopoly or monopolistic competition.
D)  Monopolistic competition, monopoly, and oligopoly.

Question 10

Monopolistically competitive firms use marginal cost pricing.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is similar for oligopoly and monopolistic competition?

Accepted Answer

A)  Both have many firms.
B)  Both have low concentration ratios.
C)  Both have market power.
D)  Both make independent production decisions.

Question 12

Describe the characteristics of a monopolistically competitive industry.

Accepted Answer

Monopolistically competitive industries ...

Question 13

Marginal cost pricing means that

Accepted Answer

A)  Goods are offered for sale at prices equal to average total cost.
B)  Firms produce where marginal cost equals marginal revenue.
C)  Firms produce where marginal cost equals zero.
D)  Goods are offered for sale at prices equal to marginal cost.

Question 14

Brand loyalty

Accepted Answer

A)  Makes the demand curve facing the firm more price-elastic.
B)  Leads to one price for all brands.
C)  Exists even when products are virtually identical.
D)  Is possible only when there are a few firms in the market.

Question 15

Refer to Figure 26.5.Which firm is least likely to engage in advertising?

Accepted Answer

A)  Firm A only.
B)  Firm B only.
C)  Firm C only.
D)  Firms A, C, andD.

Question 16

If a monopolistically competitive firm raises its price, it will

Accepted Answer

A)  Not lose any of its customers.
B)  Lose most of its customers.
C)  Lose some of its customers, but nowhere close to all its customers.
D)  Lose all of its customers.

Question 17

Monopolistically competitive firms advertise to differentiate their product from those of competitors.

Accepted Answer

A) True 
 B)False

Question 18

In monopolistic competition, modest changes in the output or price of any single firm will have no significant influence on the sales of other firms.

Accepted Answer

A) True 
 B)False

Question 19

A successful advertising campaign alters the demand curve and the supply curve facing the firm.

Accepted Answer

A) True 
 B)False

Question 20

A major difference between oligopoly and monopolistic competition is that oligopolies do not

Accepted Answer

A)  Have high concentration ratios.
B)  Have many competitors.
C)  Have high barriers to entry.
D)  Confront a downward-sloping demand curve.

Exam 12: Monopolistic Competition

The demand curve faced by a monopolistically competitive firm is

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When new firms enter a monopolistically competitive industry, ceteris paribus, the

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Cross-price elasticity is very low in monopolistic competition.

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A successful advertising campaign alters the demand curve and the supply curve facing the firm.

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Monopolistically competitive firms use marginal cost pricing.

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Describe the characteristics of a monopolistically competitive industry.

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A major difference between monopoly and monopolistic competition is

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Which of the following is similar for oligopoly and monopolistic competition?

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Which of the following characterizes monopolistic competition?

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Which of the following market structures will have higher prices in the long run than perfect competition, ceteris paribus?

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Which of the following is true about a monopolistically competitive industry?

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Which of the following most characterizes monopolistic competition?

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In monopolistic competition, modest changes in the output or price of any single firm will have no significant influence on the sales of other firms.

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If a monopolistically competitive firm raises its price, it will

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Marginal cost pricing means that

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Monopolistically competitive firms advertise to differentiate their product from those of competitors.

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A major difference between oligopoly and monopolistic competition is that oligopolies do not

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Brand loyalty

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Refer to Figure 26.5.Which firm is least likely to engage in advertising?

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Refer to Figure 26.1 for a monopolistically competitive firm.The profit-maximizing output and price combination for this firm in the short run is

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Monopolistically competitive industries ...
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