(ECON 105) Quiz 17

A differentiated product has

close but not perfect substitutes.

The major difference between monopolistic competition and monopoly is

only a monopoly can make an economic profit in the long run.

A firm is spending the profit-maximizing amount on product development when

the marginal cost of product development is equal to the marginal revenue from product development.

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

78 percent

The square of the percentage market share of each firm summed over the 50 largest firms in a market is the

Herfindahl-Hirschman Index.

Which of the following is TRUE about a firm in monopolistic competition in the long run?

P = ATC

Concentration ratios

measure whether the market is dominated by a small number of firms.

What does monopolistic competition have in common with monopoly?

a downward-sloping demand curve

The marginal revenue curve facing a monopolistically competitive firm

lies below its demand curve.

A market is considered competitive if the Herfindahl-Hirschman Index (HHI) is ________ and its four-firm concentration ratio is ________.

low; low