Micro Test 4: Monopolistic competition

Which of the following are four characterstics of a perfectly competitive market?

-producers who are price takers -standardized product -easy entry and exit -large number of buyers and sellers

The underutilization of resources that occurs when the quantity of output a firm chooses to produce is less than the quantity that minimizes the average total cost is called _______ capacity.

Excess

Laws designed to prevent firms from engaging in behaviors that would lessen competition in a . market are called:

antitrust laws

The output level for a monopoloistically competitive firm is lower than the output level that achieves the minimum average total cost for the firm and , as such:

is not productively efficient in the long run

A manufacturers profits are determined not only by its decisioons but also by the decisions of the other firms in the industry. This is why we say that oligopolistic firms are:

mutually interdependent

producers operating in oligopolistic markets generate:

normal profits and even losses in the short run.

in a monopolistically competitive market, each firm produces a differentiated and unique product, so firms face _____ -sloping demand curves.

downward

The mutual interdependence observed among oligopolistic firms is often studied using the tools of __________ theory.

game

Oligopolistic firms can influence the prices they charge for their products, but their behaviors needs to be ____________, given that they face other competitors in their industries.

strategic