Chapter 17 Monopolistic Competition
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. _ __.
11. 12. 13. 14. 15. 16. 17. 18. 19. 20. _ __.
1. Because monopolistically competitive firms produce differentiated products, each firm ( d )
a.faces a demand curve that is horizontal.
b.faces a demand curve that is vertical.
c.has no control over product price.
d.has some control over product pric
e.
2. Which of the following conditions distinguishes monopolistic competition from perfect competition? ( d )
a. Number of sellers.
b. Freedom of entry and exit.
c. Small size firms.
d. Differentiation of product.
3. A firm in a monopolistically competitive market is similar to a monopolist in the sense that it ( b )
a.must overcome significant barriers to entry.
b.faces a downward-sloping demand curve.
c.there are no barriers to entry or exit.
d.there is only one seller of the good.
4. If existing firms in the fast-food market, which is a monopolistically competitive market, realize sizable economic profits in the short run, the demand of existing firms will ( a )
a.decrease and become more elastic.
b.decrease and become less elasti
c.
c.increase and become more elastic.
d.increase and become less elastic.
5. When a monopolistically competitive firm raises its price, ( b )
a.quantity demanded falls to zero.
b.quantity demanded declines, but not to zero.
c.the market supply curve shifts outwar
d.
d.quantity demanded remains constant.
6. Which of the following is a characteristic of oligopoly or monopolistic competition, but not perfect competition? ( a )
a. Advertising and sales promotion.
b. Profit maximization according to the MR = MC rule.
c. Firms being price takers rather than price makers.
d. Horizontal demand and marginal revenue curves.
7. Cecilia’s Café is a monopolistic competitor. If Cecilia’s is currently producing at the output level where her average total cost is minimized and the café is earning economic profits, then in the long run output will ( a )
a. decrease and average total cost will increase.
b. decrease and average total cost will decrease.
c. remain unchanged as Cecilia’s is doing the best it can.
d. increase and average total costs will decreas
e.
8. In the long run, freedom of entry into a market forces a ________ to charge a price equal to average total cost, but average total cost exceeds its minimum level. ( b )
a.perfectly competitive firm
b.monopolistically competitive firm
c.oligopolistic firm
d.monopoly
9. Which of the following best describes the idea of excess capacity in monopolistic competition? ( b )
a.Firms produce more output than is socially desirable.
b.The output produced by a typical firm is less than what would occur at the
minimum point on its ATC curve.
c.Due to product differentiation, firms choose output levels where P>ATC.
d.Firms keep some surplus output on hand in case there is a shift in the demand
for their product.。