question
Which of the following is a characteristic of monopolistic competition?
answer
many firms
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In a monopolistically competitive market, there are
answer
(there are...) many firms producing similar but not identical products
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Monopolistic competition is a market structure in which
answer
(in which...) firms are free to enter or exit
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Monopolistic competition is a market in which _____ firms produce ______ goods and services
answer
many; differentiated
question
In monopolistic competition, there are
answer
many firms making a differentiated product
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Which characteristic is associated with monopolistic competition?
answer
product differentiation
question
Monopolistic competition is a market structure in which
answer
firms produce a differentiated product
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Which of the following is NOT true of monopolistic competition?
answer
Firms produce a good that is a perfect substitute for their competitors' goods.
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Monopolistic competition differs from monopoly because in monopolistic competition
answer
firms are free to enter and exit
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In monopolistic competition, when firms make an economic profit,
answer
new firms enter the industry and so the price falls and the economic profit eventually decreases to zero
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A product that is a close substitute but not a perfect substitute for the products of the other firms is called
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a differentiated product
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Firms is monopolistic competition can achieve product differentiation by
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advertising special characteristics
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The Firefox, Internet Explorer, and Opera browsers are an example of
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product differentiation (browsers)
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Brand names are an example of
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product differentiation (brands)
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Firms in which type of market earn zero economic profit in the long run?
answer
perfect competition and monopolistic competition
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How is a monopolistically competitive firm similar to a perfectly competitive firm?
answer
both will observe entry into the industry if economic profit is positive
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A monopolistically competitive firm is like a monopoly firm insofar as
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both have MR curves that lie below their demand curves
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A monopolistically competitive firm is like a perfectly competitive firm insofar as
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both make zero economic profit in the long run
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For a firm in monopolistic competition, the marginal cost cure intersects the average total cost curve
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at the minimum average total cost
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The profit maximizing condition for a firm in monopolistic competition is to produce so that
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marginal cost equals marginal revenue
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When firms in monopolistic competition incur an economic loss, some firms will
answer
exit the industry, and demand will increase for the firms that remain.
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If firms in a monopolistically competitive market are earning an economic profit, then
answer
new firms will enter the industry
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When firms in monopolistic competition are making an economic profit, firms will
answer
enter the industry, and demand will decrease for the original firms
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In monopolistically competitive industries,
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entry and exit push economic profits toward zero
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A firm is said to have excess capacity when it produces the amount of output
answer
smaller than that which minimizes average total cost
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In monopolistic competition, in the long run firms have
answer
excess capacity
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