MONOPOLISTIC COMPETITION 1. All of the following are characteristics of a monopo

Question

MONOPOLISTIC COMPETITION 1. All of the following are characteristics of a monopolistically competitive market excepr a. there are many firms in a monopolistically competitive market. b. the firms in the industry produce goods that are close, but not perfect, substitutes. c there are significant barriers to entry that prevent new firms from entering the market in the long run. d. each firm faces a downward-sloping demand curve and has some control over the price of its product. All of the following are true regarding monopolistically competitive markets except a. b, c. d. 2. firms may advertise to differentiate their products. there are many firms in the market. the typical firm earns positive economic profit in the long run. the number of firms is likely to decline when there are economic losses. A monopolistically competitive firm's demand curve is: a. 3. b. c. d. more elastic than a perfectly competitive firm's demand curve. downward-sloping and marginal revenue lies below demand. horizontal at the market-determined price. less elastic than the market demand curve for its product. The typical firm in a monopolistically competitive market a. b. c. d. 4· earns a positive economic profit in the long run due to product differentiation. is small relative to the entire market for its general product. generally controls a large share of its market. cannot earn a positive economic profit in the short run due to the presence of close substitutes. The demand curves of firms in monopolistically competitive markets are relatively elastic compared to market demand due to: a. the existence of very close substitutes. b. the large size of the typical firm in the market. c. marginal revenue exceeding price. d. the complexity of production. 5. Jane plans to open her own restaurant and wants to create a strong demand for her product as well as make it less price elastic. All of the following are methods of produc differentiation that would help her accomplish her goals except a. setting the price of her meals well below the prices charged by her rivals. b. using tasteful furnishings and music to create a pleasant atmosphere. c. hiring the best chefs so she can offer the finest quality cuisine. d. using different forms of advertising to inform and attract potential customers 6.

Explanation / Answer

1- in monopolistically competitive market there are no barriers to entry because there is no system for patents etc, there are no natural barriers that are caused by like decreasing average cost in monopoly.

so answer is C

2- in monopolistically competitive market there are no barriers to entry thus the firms can enter the market easily if there are profits in the market , thus in long run the economicv profits have to be zero they cant be positive.

so answer is C

3- the demand curve for a monopolictically competitive firm is downward sloping with MR curve lying below it,

so answer is B

4- a typical firm in a monopolistically competitive market is short in comparison to the entire market, so in terms to entire market it is relatively small.

so answer is B

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.