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