Microeconomics, 5e (Hubbard/O'Brien) Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting | All Answers Correct

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Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market 4) Which of the following characteristics is not common to monopolistic competition and perfect competition? A) Firms... act to maximize profit. B) Entry barriers into the industry are low. C) The market demand curve is downward -sloping. D) Firms take market prices as given. Answer: D 7) The key characteristics of a monopolistically competitive market structure include A) few sellers. B) sellers selling similar but differentiated products. C) high barriers to entry. D) sellers acting to maximize revenue. Answer: B 9) In monopolistic competition there is/are A) many sellers who each face a downward-sloping demand curve. B) a few sellers who each face a downward-sloping demand curve. C) only one seller who faces a downward-sloping demand curve. D) many sellers who each face a perfectly elastic demand curve. Answer: A 10) Which of the following is true for a firm with a downward-sloping demand curve for its product? A) Price, average revenue, and marginal revenue are all equal. B) Price, average revenue, and marginal revenue are all different. C) Price equals average revenue but is greater than marginal revenue. D) Price equals average revenue but is less than marginal revenue. Answer: C 11) If a firm faces a downward-sloping demand curve A) the demand for its product must be inelastic. B) it can control both price and quantity sold. C) it must reduce its price to sell more units. D) it will always make a profit. Answer: C 12) A monopolistically competitive firm faces a downward-sloping demand curve because A) it is able to control price and quantity demanded. B) there are few substitutes for its product. C) of product differentiation. D) its market decisions are affected by the decisions of its rivals. [Show More]

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