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1 ECON 2010 Fall 2010 Review questions 11 1. In which industry is monopolistic competition most likely to be found? A. Utilities B. Agriculture C. Retail trade D. Mining 2. Refer to the above graph. A successful advertising campaign by a monopolistically competitive firm will cause the demand curve to shift from: A. A to B and become more elastic B. A to B and become less elastic C. B to A and become more elastic D. B to A and become less elastic 3. The stronger the product differentiation in monopolistic competition, the: A. Less elastic the demand curve, and production will take place further to the left of minimum average costs B. Less elastic the demand curve, and production will take place further to the right of minimum average costs C. More elastic the demand curve, and production will take place further to the left of minimum average costs D. More elastic the demand curve, and production will take place further to the right of minimum average costs 4. A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating: A. With a profit in the short run B. With a loss in the short run C. At the break-even level of output in the short run D. At an efficient level of output in the short run 2 The graph depicts a monopolistically competitive firm 5. Refer to the above graph. In the short run, this monopolistically competitive firm will set price at: A. $65 and produce 45 units of output B. $65 and produce 35 units of output C. $50 and produce 35 units of output D. $50 and produce 50 units of output Answer the next question(s) based on the demand and cost schedules for a monopolistic competitor given in the table below 6. Refer to the above table. What output will the profit-maximizing monopolistic competitor produce? ... View Full Document

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