Chapter 3
Compared with a perfectly competitive firm facing the same long run equilibrium for a monopolistic competitive firm will result in
A higher price and less outputs
In oligopoly an action by one firm to decrease price, change output or quality causes
A reaction by other firms
All of the following are characteristics of monopolistic completion except
Advertising
Which of the following describes monopolistic competition?
Advertising plays a key role
The most common reason for the existence of oligopolies is
Economics scale
Which of the following is a characteristic of oligopolies
Many firms
In a monopolistically competive market there are
Many firms producing similar but not identical products
An oligopoly market each firm
Must consider the reaction of rival firms when making a pricing or output descion
In a monopolistic competitive market the consumer receives the benefits of
Product diversity
When the oligopolistic firm goes to increase price
The rivals will not follow they will let that one firm increase its price
If a firm in an oligopoly lowers its price everyone follows and not much is gained by that firm in terms of sales or you have in elastic demand
True
In general horizontal mergers will
decrease the number of firms in an industry.*
The distinguishing of products by brand name color and other attributes
is known as product differentiation.
The main objective of advertising for a monopolistically competitive firm is
to differentiate the product and boost demand
