17 - Chapter 17 Monopolistic Competition MULTIPLE CHOICE 1...

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Chapter 17 Monopolistic Competition MULTIPLE CHOICE 1 . Monopolistic competition is characterized by which of the following attributes? (i) free entry (ii) product differentiation (iii) many sellers a. (i) and (iii) only b. (i) and (ii) only c. (ii) and (iii) only d. (i), (ii), and (iii) 2 . The phenomenon of product differentiation contrasts sharply with the phenomenon of a. homogeneous products. b. industrial products. c. monopolistic competition. d. product integration. 3 . In a monopolistically competitive industry, price is a. equal to marginal cost since each firm is a price taker. b. below marginal cost since each firm is a price taker. c. above marginal cost since each firm is a price setter. d. always a fraction of marginal cost since each firm is a price setter. 4 . In which of the following market structures is the number of sellers less than “many?” (i) monopolistic competition (ii) monopoly (iii) oligopoly a. (i) and (ii) only b. (ii) and (iii) only c. (ii) only d. All of the above are correct. 5 . Which of the following market structures features free entry and exit? (i) perfect competition (ii) monopolistic competition (iii) monopoly a. (i) only b. (i) and (ii) only c. (ii) and (iii) only d. All of the above are correct. 6 . Monopolistic competition differs from perfect competition because in monopolistically competitive markets a. there are barriers to entry. b. all firms can eventually earn economic profits. c. each of the sellers offers a somewhat different product. d. strategic interactions between firms is vitally important. 7 . One way in which monopolistic competition differs from oligopoly is
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a. there are no barriers to entry in oligopolies. b. in oligopoly markets there are only a few sellers. c. all oligopoly firms eventually earn zero economic profits. d. strategic interactions between firms are rarely evident in oligopolies. 8 . A similarity between monopoly and monopolistic competition is that, in both market structures, a. strategic interactions among sellers are important. b. there are fewer than “many” sellers. c. sellers are price makers rather than price takers. d. product differentiation is important. 9 . A profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market  because the firm in the monopolistically competitive market a. is characterized by market share maximization. b. has no barriers to entry. c.
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17 - Chapter 17 Monopolistic Competition MULTIPLE CHOICE 1...

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