1)
The demand facing a monopolistically competitive firm is ________ a monopolistic firm and ________ a perfectly competitive firm.
1)
_______
A)
less elastic than; more elastic than
B)
as elastic as; less elastic than
C)
more elastic than; less elastic than
D)
more elastic than; as elastic as
2)
A monopolistically competitive firm
2)
_______
A)
sells a fixed amount of output regardless of price.
B)
can sell an infinite amount of output at the market-determined price.
C)
must raise price to sell more output.
D)
must lower price to sell more output.
Refer to the information provided in Figure 15. 1 below to answer the questions that follow. Below are drawn cost curves for Dom’s Barber Shop, a monopolistically competitive firm. Figure 15. 1
3)
Refer to Figure 15.
1. In this industry in the long run
3)
_______
A)
product demand will decrease so that profits are decreased.
B)
firms will enter until all firms earn a normal profit.
C)
the government will impose price controls to eliminate any economic profits.
D)
firms will continue to earn economic profits.
4)
When some firms exit a monopolistically competitive industry, the demand curves of the remaining firms in the industry
4)
_______
A)
shift downward.
B)
shift to the right.
C)
shift to the left.
D)
do not change.
5)
Monopolistically competitive firms in long-run equilibrium produce at ________ the optimal scale.
5)
_______
A)
less than
B)
sometimes more and sometimes less than
C)
more than
D)
exactly
6)
Assuming no externalities exist, if a good’s price is less than its marginal cost, then the benefits consumers derive are ________ than the cost of resources needed to…
