CHAPTER 25 - CHAPTER 25 1. Monopolistic competition is...

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CHAPTER 25 1. Monopolistic competition is characterized by a: A) few dominant firms and low entry barriers. B) large number of firms and substantial entry barriers. C) large number of firms and low entry barriers. D) few dominant firms and substantial entry barriers. 2. Monopolistic competition resembles pure competition because: A) both industries emphasize nonprice competition. B) in both instances firms will operate at the minimum point on their long-run average total cost curves. C) both industries entail the production of differentiated products. D) barriers to entry are either weak or nonexistent. 3. Nonprice competition refers to: A) competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts. B) price increases by a firm which are ignored by its rivals. C) advertising, product promotion, and changes in the real or perceived characteristics of a product. D) reductions in production costs which are not reflected in price reductions. 4. Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because: A) the number of firms in the industry is larger. B) monopolistically competitive firms cannot realize an economic profit in the long run. C) of product differentiation and consequent product promotion activities. D) monopolistically competitive producers are mutually interdependent in their pricing strategies. 5. Monopolistically competitive and purely competitive industries are similar in that:
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This note was uploaded on 10/15/2009 for the course ECON 2302 taught by Professor Parker during the Spring '09 term at University of Texas-Tyler.

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CHAPTER 25 - CHAPTER 25 1. Monopolistic competition is...

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