Monopolistic Competition and Market Characteristics Quiz
Test your knowledge on monopolistic competition with this quiz covering product differentiation, pricing power, advertising, and long-run equilibrium.
#1
In monopolistic competition, firms have ________ products.
identical
unique
standardized
homogeneous
#2
Which of the following is a characteristic of monopolistic competition?
A small number of firms dominate the market
Products are perfect substitutes for each other
There are significant barriers to entry
Product differentiation exists
#3
What is one consequence of product differentiation in monopolistic competition?
Increased price competition
Decreased consumer choice
Decreased advertising expenditures
Reduced price elasticity of demand
#4
Which of the following is a feature of monopolistic competition?
High barriers to entry
Homogeneous products
Price taker behavior
Product differentiation
#5
In monopolistic competition, firms have a degree of ________ over the price of their products.
perfect control
limited control
no control
indirect control
#6
Which of the following statements is true regarding monopolistic competition?
Firms earn zero economic profit in the long run
Firms produce at the lowest point on the average total cost curve
There is complete price uniformity among firms
Firms face no competition
#7
Which market structure is characterized by a relatively high degree of non-price competition?
Perfect competition
Monopoly
Oligopoly
Monopolistic competition
#8
What is the long-run equilibrium condition for firms in monopolistic competition?
Marginal cost equals marginal revenue
Average total cost equals price
Economic profit equals zero
Price equals marginal cost
#9
What role does advertising often play in monopolistic competition?
To reduce competition among firms
To increase the number of firms in the market
To make products more identical
To differentiate products and attract customers
#10
Which of the following is a criticism of monopolistic competition?
It encourages innovation
It leads to allocative efficiency
It may result in excess capacity
It maximizes consumer surplus
#11
Which of the following is a consequence of monopolistic competition?
Perfect competition
Resource misallocation
Increased price uniformity
Higher barriers to entry
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