Ch 23 Practice Test 3

Ch 23 Practice Test 3 - Ch 23 Practice Test 3 Student: _ 1....

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Ch 23 Practice Test 3 Student: ___________________________________________________________________________ 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 that 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 that are not reflected in price reductions. 4. The restaurant, legal assistance, and clothing industries are each illustrations of: A.countervailing power. B.homogeneous oligopoly. C.monopolistic competition. D.pure monopoly. 5. Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because: A.of product differentiation and consequent product promotion activities. B.monopolistically competitive firms cannot realize an economic profit in the long run. C.the number of firms in the industry is larger. D.monopolistically competitive producers use strategic pricing strategies to combat rivals. 6. Nonprice competition refers to: A.low barriers to entry. B.product development, advertising, and product packaging. C.the differences in information which consumers have regarding various products. D.an industry or firm in long-run equilibrium. 1
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7. 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. B.product differentiation and the monopolistic element from high entry barriers. C.a perfectly elastic demand curve and the monopolistic element from low entry barriers. D.a highly inelastic demand curve and the monopolistic element from advertising and product promotion. 8. The monopolistic competition model predicts that: A.allocative efficiency will be achieved. B.productive efficiency will be achieved. C.firms will engage in nonprice competition. D.firms will realize economic profits in the long run. 9.
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This note was uploaded on 05/10/2010 for the course ECO 201 taught by Professor Mikeadkins during the Spring '08 term at KCTCS.

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Ch 23 Practice Test 3 - Ch 23 Practice Test 3 Student: _ 1....

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