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.Management Sciences
Category: Monopoly & Competition
Which of the following is not a characteristic of a monopolistically competitive market ?
A. free entry and exit
B. long run economic profits
C. many sellers
D. differentiated products
In the short run, if the price is above average total cost in a monopolistically competitive market, the firm makes ?
A. losses and firms exit the market
B. profits and firms exit the market
C. losses and firms enter the market
D. profits and firms enter the market
Which of the following is not an argument put forth by economists in support of the use of advertising ?
A. Advertising increases competition
B. Advertising provides information to customers about prices, new products and location of retail outlets.
C. Advertising provides a creative outlet for artists and writers
D. Advertising provides new firms with the means to attract customers from existing firms.
Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals ?
A. marginal revenue and then use the demand curve to determine the price consistent with this quantity
B. average total cost and then use the supply curve to determine the price consistent with this quantity
C. marginal revenue and then use the supply curve to determine the price consistent with this quantity
D. average total cost and then use the demand curve to determine the price consistent with this quantity
Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?
A. at the efficient scale and charge a price equal to marginal cost
B. at the efficient scale and charge a price above marginal cost
C. With excess capacity and charge a price above marginal cost
D. With excess capacity and charge a price equal to marginal cost
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