#1
In monopolistic competition, firms have ________ products.
unique
ExplanationDistinctive products that set them apart from competitors.
#2
Which of the following is a characteristic of monopolistic competition?
Product differentiation exists
ExplanationPresence of varied products to distinguish from competitors.
#3
What is one consequence of product differentiation in monopolistic competition?
Reduced price elasticity of demand
ExplanationCustomers become less sensitive to price changes.
#4
Which of the following is a feature of monopolistic competition?
Product differentiation
ExplanationDistinguishing products from those of competitors.
#5
In monopolistic competition, firms have a degree of ________ over the price of their products.
limited control
ExplanationAbility to influence but not completely dictate prices.
#6
Which of the following statements is true regarding monopolistic competition?
Firms earn zero economic profit in the long run
ExplanationLong-term profits trend towards zero due to competition.
#7
Which market structure is characterized by a relatively high degree of non-price competition?
Monopolistic competition
ExplanationCompetition based on factors other than price.
#8
What is the long-run equilibrium condition for firms in monopolistic competition?
Economic profit equals zero
ExplanationProfits level off to zero in the long term.
#9
What role does advertising often play in monopolistic competition?
To differentiate products and attract customers
ExplanationUsed to highlight unique features and draw consumers.
#10
Which of the following is a criticism of monopolistic competition?
It may result in excess capacity
ExplanationCompanies might produce below their full capacity.
#11
Which of the following is a consequence of monopolistic competition?
Resource misallocation
ExplanationResources may not be allocated efficiently.