Monopolistic Competition and Market Structure Quiz
Test your knowledge on monopolistic competition, product differentiation, market power, and more with this industrial organization quiz.
#1
In monopolistic competition, firms differentiate their products to:
Reduce costs
Maximize profits
Avoid competition
Attract customers
#2
Which of the following is a characteristic of monopolistic competition?
Many firms selling identical products
Perfect knowledge among buyers and sellers
Free entry and exit of firms
Firms can influence the market price
#3
Which statement is true regarding the long-run equilibrium in monopolistic competition?
Price equals marginal cost
Price equals average total cost
Price equals marginal revenue
Price equals marginal revenue and marginal cost
#4
What is a key difference between monopolistic competition and perfect competition?
Number of firms in the market
The level of product differentiation
Profit maximization behavior
Market demand elasticity
#5
In the long run, monopolistic competition results in:
Economic efficiency
Allocative efficiency
Productive efficiency
Pareto efficiency
#6
Which factor can lead to a shift in the demand curve for a firm in monopolistic competition?
Changes in the number of firms in the industry
Changes in the price elasticity of demand
Changes in government regulations
Changes in the minimum wage
#7
Which statement best describes the short-run behavior of a monopolistically competitive firm?
Price equals marginal cost
Price equals average total cost
Price exceeds marginal cost
Price equals marginal revenue
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