Ch13Practice_Test_Questions

Ch13Practice_Test_Questions - 13 C h a p t e r MONOPOLISTIC...

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13 MONOPOLISTIC  COMPETITION  AND  OLIGOPOLY Monopolistic Competition Topic: Monopolistic Competition Skill: Recognition 1) Which of the following is a characteristic of the market structure for monopolistic competi- tion? A) Barriers to entry. B) A large number of firms compete. C) Each firm produces a differentiated product. D) Both answers B and C are correct. Answer: D Topic: Monopolistic Competition Skill: Recognition 2) Which characteristic is associated with mono- polistic competition? A) Collusion B) Product differentiation C) Small number of firms D) Awareness of rival firms in the market Answer: B Topic: Monopolistic Competition Skill: Recognition 3) Monopolistic competition is a market structure in which A) firms face barriers to entry. B) a large number of firms compete. C) firms produce and sell an identical product. D) firms face perfectly elastic demand for their product. Answer: B Topic: Monopolistic Competition Skill: Recognition 4) Which of the following is NOT a characteristic of monopolistic competition? A) A large number of firms compete. B) Entry and exit is restricted. C) Firms compete on product quality. D) Firms compete on price. Answer: B Topic: Monopolistic Competition Skill: Recognition 5) Which of the following is NOT a characteristic of monopolistic competition? A) There are many firms in the market. B) The firms act as price-taking firms. C) The firm might advertise its product. D) The product of one firm is somewhat different from that of another firm. Answer: B Topic: Monopolistic Competition Skill: Recogn i tion 6) Which of the following is NOT a characteristic of monopolistic competition? A) There are a large number of competing firms. B) There are significant barriers to entry. C) Each firm produces a differentiated product. D) Collusion is impossible Answer: B 179  C h a p t e r
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1 8 0 C H A P T E R   1 3 Topic: Monopolistic Competition Skill: Recognition 7) In a monopolistically competitive market there are A) Many firms. B) One firm. C) A very small number of firms. D) Two firms. Answer: A Topic: Monopolistic Competition Skill: Recognition 8) Within a monopolistically competitive in- dustry, A) each firm faces a downward sloping demand curve. B) firms can charge a higher price for a higher quality product. C) firms are not able to collude because there are too many of them. D) All of the above answers are correct. Answer: D Topic: Monopolistic Competition Skill: Recognition 9) In monopolistically competitive markets, products are ____ and entry is ____. A) identical; free B) differentiated; free C) identical; hard D) differentiated; hard Answer: B Topic: Monopolistic Competition Skill: Recognition 10) Within a monopolistically competitive in- dustry, A) firms can freely enter and exit and economic profits are zero in the long run. B)
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Ch13Practice_Test_Questions - 13 C h a p t e r MONOPOLISTIC...

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