Question

In questions 1-10 (1 pt each), fill in the blanks with the right letter or letters for the name of the type of competition. Many, but not all questions, will require you to write multiple letters. M-monopoly o-oligopoly MC – monopolistic competition C-competition 1. Competition may be based on different features of the product or service 2. Barriers to entry are substantial 3. No barriers to entry, 4. Can earn economic profits in the short-run 5. In equilibrium, profits are zero 6. In equilibrium, price = marginal cost 7. In equilibrium, price = average cost 8. Price maker 9. Individual firm faces downward sloping demand curve 10. Demand curve for entire market is downward sloping,

Answer 1

1) MC and O. Product differentiation in one of the most important feature of monopolistic competition in which firms attempt to differentiate their products by designs, packaging and adding other features

2) M and O. Entry barriers are strong in these markets due to which they can earn long run profits

3) C and MC. Long run allows firms to enter and exit costlessly because firms are large in number and they do not / cannot pose a threat to entry or exit

4) M O C MC

5) C MC

6) C

7) C MC

8) M MC O

9) M MC O

10) M