chapter.13 quiz

Which of the following best describes the efficiency of monopolistically competitive firms? Neither allocatively efficient nor productively efficient. Allocatively efficient but productively inefficient. Both allocatively efficient and productively efficient. Allocatively inefficient but productively efficient.

Neither allocatively efficient nor productively efficient.

d. Firms will enter a monopolistically competitive industry when there are any profits. This will shift supply to the right, increasing the firm's market share and its profit. normal profits. This will shift demand to the left, reducing the firm's market share and its economic profit. normal profits. This will shift demand to the right, reducing the firm's market share and its economic profit. economic profits. This will shift demand to the left, reducing the firm's market share and its economic profit

economic profits. This will shift demand to the left, reducing the firm's market share and its economic profit.

a. The difference between monopolistic competition and pure competition is that in comparison to pure competition, monopolistic competition has more firms, no product differentiation, no price control, and relatively easy but not barrier-free entry. more firms, product differentiation, some price control, and barrier-free entry. fewer firms, product differentiation, some price control, and relatively easy but not barrier-free entry. fewer firms, product differentiation, some price control, and barrier-free entry.

fewer firms, product differentiation, some price control, and relatively easy but not barrier-free entry.

a. Compared to pure monopoly and pure competition, monopolistically competitive industries might have economic profits, they will remain constant as competitors enter, and there will be productive efficiency. might have economic profits, they will diminish as competitors enter, and there will be productive inefficiency. will have economic profits, they will remain constant as competitors enter, and there will be productive efficiency. will have economic profits, they will diminish constant as competitors enter, and there will be productive efficiency.

might have economic profits, they will diminish as competitors enter, and there will be productive inefficiency.

b. The difference between monopolistic competition and pure monopoly is that in comparison to monopolistic competition, pure monopoly has at least one firm, a patented product, some price control, and few entry barriers. one firm, a patented product, some price control, and entry barriers. at least one competitor, a patented product, little price control, and few entry barriers. one firm, a unique product, price control, and entry barriers.

one firm, a unique product, price control, and entry barriers.

Product differentiation describes registered differences in product characteristics. provides an advantage in the market. is usually nonexistent. only occurs when there is brand loyalty.

provides an advantage in the market

b. "In the long run, monopolistic competition leads to a monopolistic price but not to monopolistic profits." This statement is false, since P > MC, but the availability of close substitutes pushes the price of the average firm down until it equals ATC. true, since P < MC, but the lack of available close substitutes pushes the price of the average firm up until it equals ATC. false, since P < MC, but the lack of available close substitutes pushes the price of the average firm up until it equals ATC. true, since P > MC, but the availability of close substitutes pushes the price of the average firm down until it equals ATC.

true, since P > MC, but the availability of close substitutes pushes the price of the average firm down until it equals ATC