ReviewCh16 - Chapter 16 Multiple Choice Identify the choice that best completes the statement or answers the question 1 A monopolistically

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Chapter 16 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A monopolistically competitive industry is characterized by a. many firms selling products that are similar but not identical. b. many firms selling identical products. c. a few firms selling products that are similar but not identical. d. a few firms selling highly different products. ____ 2. A monopolistically competitive industry is characterized by a. many firms, differentiated products, and barriers to entry. b. many firms, differentiated products, and free entry. c. a few firms, identical products, and free entry. d. a few firms, differentiated products, and barriers to entry. ____ 3. Which of the following is not a characteristic of monopolistic competition? a. a large number of sellers b. firms are price takers c. free entry into the market d. a differentiated product ____ 4. 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) ____ 5. 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 are important. ____ 6. A downward-sloping demand curve a. is a feature of all monopolistically competitive firms. b. means that the firm in question will never experience a zero profit. c. causes marginal revenue to exceed price. d. prohibits firms from earning positive economic profits in the long run. ____ 7. For a monopolistically competitive firm, at the profit-maximizing quantity of output, a. price exceeds marginal cost. b. marginal revenue exceeds marginal cost. c. marginal cost exceeds average revenue. d. price equals marginal revenue. ____ 8. In the short run, a firm in a monopolistically competitive market operates much like a
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a. firm in a perfectly competitive market. b. firm in an oligopoly. c. monopolist. d. monopsonist. ____ 9. A monopolistically competitive firm chooses a. the quantity of output to produce, but the market determines price. b. the price, but competition in the market determines the quantity. c. price, but output is determined by a cartel production quota. d. the quantity of output to produce and the price at which it will sell its output. ____ 10. Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms, a. marginal revenue will equal average total cost. b. price will exceed marginal cost. c.
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This note was uploaded on 12/02/2011 for the course ECON ECON200 taught by Professor Songhualin during the Fall '11 term at Maryland.

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ReviewCh16 - Chapter 16 Multiple Choice Identify the choice that best completes the statement or answers the question 1 A monopolistically

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