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.
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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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This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.
Where does monopolistic competition maximize profit?
A monopolistic market has no competition, meaning the monopolist controls the price and quantity demanded. The level of output that maximizes a monopoly's profit is when the marginal cost equals the marginal revenue.
How a monopolistically competitive firm maximizes profit in the short run?
In the short run, a monopolistically competitive firm maximizes profit or minimizes losses by producing that quantity where marginal revenue = marginal cost. If average total cost is below the market price, then the firm will earn an economic profit.
What happens in monopolistic competition at the point where Mr Mc?
Also like a monopoly, a monopolistic competitive firm will maximize its profits by producing goods to the point where its marginal revenues equals its marginal costs. The profit maximizing price of the good will be determined based on where the profit-maximizing quantity amount falls on the average revenue curve.
What is the profit
What is the profit maximization rule for a monopolistically competitive firm? To produce a quantity such that marginal revenue = marginal cost.