Question

QUESTION 1

Which of the following is not a characteristic of the monopolistic competition market structure?

		Many sellers, each small in size relative to the overall market.
		Few sellers.
		Differentiated product.
		Easy, low-cost entry and exit.

QUESTION 2

Which of the following is the best example of a monopolistic competitor?

		Wheat farmers.
		Restaurants.
		Air Canada.
		General Motors.

QUESTION 3

In the long run, both monopolistic competition and perfect competition result in:

		a wide variety of brand-name choices for consumers.
		an efficient allocation of resources.
		zero economic profit for firms.
		excess capacity.

QUESTION 4

In the long run, monopolistically competitive firms have:

		excess capacity.
		positive profits.
		minimal average costs.
		homogeneous production.

QUESTION 5

A monopolistically competitive firm will:

		maximize profits by producing where MR = MC.
		not likely earn an economic profit in the long run.
		shut down in the short run if price is less than average variable cost.
		all of the above.

QUESTION 6

A monopolistic competitive firm is inefficient because the firm:

		earns positive economic profit in the long run.
		is producing at an output corresponding to the condition that marginal cost equals price.
		is not maximizing its profit.
		produces an output where average total cost is not minimum.

QUESTION 7

Monopolistic competitive firms in the long run earn:

		positive economic profits.
		zero pure economic profits.
		negative economic profits.
		Positive, zero, or negative economic profits.

QUESTION 8

Which of the following statements best describes firms under monopolistic competition?

		Profits will be positive in the long run.
		Price always equals average variable cost.
		In the long run, positive economic profit will be eliminated.
		Marginal revenue equals minimum average total cost in the short run.

Answer 1

Abswer option Fewer sellers

Fewer sellers is not characteristic of the monopolistic competition market structure. Fewer sellers is a feature of oligopolist market structure.

Answer option b restaurant

Restaurant is the best example of a monopolistic competitor

Answer Option C) zero economic profit for firms

In the long run, both monopolistic competition and perfect competition result in: zero economic profit for firms.

Answer option a) excess reserve

In the long run, monopolist competitive firms produce with excess reserves.