1.
Which of the following is not characteristic of monopolistic competition?
A.
relatively large numbers of sellers
B.
product differentiation
C.
production at minimum ATC in the long-run
D.
relatively easy entry to the industry
2.
A monopolistically competitive industry combines elements of both competition and monopoly. It is correct to say that the competitive element results from:
a relatively large number of firms and the monopolistic element from product differentiation.
product differentiation and the monopolistic element from high entry barriers.
a perfectly elastic demand curve and the monopolistic element from low entry barriers.
a highly inelastic demand curve and the monopolistic element from advertising and product promotion.
3.
The demand curve of a monopolistically competitive producer is:
less elastic than that of either a pure monopolist or a purely competitive seller.
less elastic than that of a pure monopolist, but more elastic than that of a purely competitive seller.
more elastic than that of a pure monopolist, but less elastic than that of a purely competitive seller.
more elastic than that of either a pure monopolist or a purely competitive seller.
4.
R-1 F25030
Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be:
$10.
$13.
$16.
$19.
5.
Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be:
210.
180.
160.
100.
6.
Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic:
loss of $320.
loss of $280.
profit of $480.
profit of $600.
E.
profit of $360.
7.
R-2 F25037
Refer to the above diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by:
diagram a only.
diagram b only.
diagram c only.
both diagrams a and c.
8.
R-3 F25045
In long-run equilibrium the firm shown in the diagram above will:
earn a normal profit.
go bankrupt.
realize a loss.
realize an economic profit.
9.
In long-run equilibrium, production for the firm shown in the diagram above is:
greater than would occur under pure competition.
less efficient than in a purely competitive market.
more efficient than in a purely competitive market.
optimally efficient.
10.
When a monopolistically competitive firm is in long-run equilibrium:
P = MC = ATC.
MR = MC and minimum ATC > P.
MR > MC and P = minimum ATC.
MR = MC and P > minimum ATC.
11.
In monopolistically competitive markets resources are:
overallocated because long-run equilibrium occurs where price exceeds marginal cost.
underallocated because long-run equilibrium occurs where price exceeds marginal cost.
overallocated because long-run equilibrium occurs where marginal cost exceeds price.
underallocated because long-run equilibrium occurs where marginal cost exceeds price.
12.
In long-run equilibrium a monopolistically competitive firm will:
earn an economic profit.
realize all economies of scale.
equate price and marginal cost.
have excess production capacity.
