#1
In monopolistic competition, firms differentiate their products to:
Attract customers
ExplanationTo stand out and appeal to specific consumer preferences.
#2
Which of the following is a characteristic of monopolistic competition?
Firms can influence the market price
ExplanationThey possess some control over pricing due to product differentiation.
#3
Which statement is true regarding the long-run equilibrium in monopolistic competition?
Price equals average total cost
ExplanationPrice settles where the firm's costs and revenue balance out.
#4
What is a key difference between monopolistic competition and perfect competition?
The level of product differentiation
ExplanationPerfect competition lacks product differentiation, while monopolistic competition thrives on it.
#5
In the long run, monopolistic competition results in:
Productive efficiency
ExplanationFirms producing at the lowest possible cost while still producing at the quantity demanded.
#6
Which factor can lead to a shift in the demand curve for a firm in monopolistic competition?
Changes in the price elasticity of demand
ExplanationShifts occur due to changes in consumers' responsiveness to price changes.
#7
Which statement best describes the short-run behavior of a monopolistically competitive firm?
Price exceeds marginal cost
ExplanationFirms may charge higher prices initially due to market power.