Monopolistic Competition Chapter 25 Practice

Supposed to firms never discuss their prices or output decisions with each other yet prices are always very close together. Whenever one form announces new prices all other forms soon announce the same prices. It would appear that the firms are

Engaging in the price leadership strategy

With a limit pricing strategy

Existing firms charge a price lower than the profit-maximizing price in order to deter entry of new firms

Long run equilibrium is characterized by zero profits in

Market structures characterized as having free entry

The joining of firms that are producing more selling a similar product is

A horizontal merger

In the long run in monopolistic competition price will be

Greater than the minimum ATC

The monopolistically competitive firm maximizes profit by producing at the point where

MC = MR

Which of the following is not characteristic of monopolistic competition

Marginal cost pricing in the long run

The long-run equilibrium of monopolistic competition is characterized by

P = ATC > MC

For the monopolistic competitor in both the short run and the long run

Price will exceed marginal cost

In the long run equilibrium the monopolistically competitive firm will

Produce at a point to the left of the minimum point on its average total cost curve

As the definition of a product Narrows or becomes more specific, the concentration ratio _______

Tends to increase

One way to view the cost structure of monopolistic competition is to say that the cost of producing product differentiation is equal to

The difference between the cost of production for a monopolistically competitive firm in an open market and the minimum average total cost

Compared to a perfectly competitive firm the monopolistically competitive firm in the long run will have

A lower output level

The long run equilibrium of a monopolistic competitor is characterized by

A tangency between the average total cost curve and the firm's demand curve

Which of the following is not a characteristic of monopolistic competition

Barriers to entry

When a group of firms pollutes to set prices at the highest level possible without encouraging entry wicho which one of the following models are they implemented

Product differentiation

Firms in both a monopolistically competitive market and in a purely monopolistic Market

Set price greater than marginal cost