The diagram depicting monopolistic competition in the

276. The diagram depicting monopolistic competition in the short run:
o
a.is very similar to the short run monopoly diagram.
o
b.is very similar to the short run perfect competition diagram.
o
c.is very similar to the short run oligopoly diagram.
o
d.is completely different to the diagrams of all the other types of markets.
277. If the Average Total Cost curve of a firm in monopolistic competition happens
to be above the demand curve, it means:
o
a.the firm will have to sell a lot in order to make a profit.
o
b.the firm will have to sell at a very high price in order to make a profit.
o
c.other firms are performing better in the market than the firm depicted in the diagram.
o
d.that firms in that industry will be incurring losses in the short run.
278. In the long run, firms in monopolistic competition will see their price:
o
a.become equal to their Average Variable Cost.
o
b.become equal to their Average Total Cost.
o
c.remain well above their Average total Cost.

o
d.become equal to their Marginal Cost.
279. If firms in monopolistic competition are enjoying positive economic profits, in
the long run:
o
a.they will continue enjoying such profits, since new firms will be unable to enter the
industry.
o
b.consumers will cease wanting to buy such expensive goods and will switch to cheaper
alternatives.
o
c .this will attract new firms into the industry, causing prices to drop and profits to
disappear.
o
d.the government will have to step in and regulate the price.
280. Firms in monopolistic competition in long run equilibrium ________ than firms
in perfect competition.
o
a.produce less
o
b.charge a lower price
o
c.have bigger profits
o
d.have lower costs
281. In monopolistic competition in long run equilibrium, the price will be equal to:
o
a.the marginal cost.
o
b.marginal revenue.
o
c.average variable cost.
o
d.average total cost.
282. A major critique of advertising is that:
o
a.it provides information to consumers that they would be better off without.
o
b.it manipulates people's tastes, leading people to make bad choices.
o
c.it promotes excessive competition among firms in the industry.
o
d.it is usually linked to promotions, which undermine the market's price.
283. A major argument in favor of advertising is that:
o
a.it provides information to consumers that allows them to make better choices.
o
b.it helps people reaffirm their tastes and preferences.
o
c.it reduces competition among firms in the industry, leading to lower prices.
o
d.it is usually linked to promotions, which help lower the market's price.