Which statements are correct about the demand curve is faced by a monopolistic competitor?

Econ 121 MC Quiz, Ch. 10e

Inhaltsverzeichnis Show

Which is true about the demand curve of a monopolistically competitive firm?
Which statement about monopolistic competition is correct?
What happens to demand curve in monopolistic competition?
What is the shape of the demand curve faced by a firm under monopolistic competition?

In general, which of the following statements is characteristic of oligopolies?

A.	They encourage price flexibility.

B.	They tend to allocate resources efficiently.

C.	They encourage price competition rather than nonprice competition.

D.	They misallocate resources.

E.	Their profitability depends on their size.

2.	The "joint monopoly" output is

The monopolistically competitive seller's demand curve will become more elastic the:

A.	larger the number of competitors.

B.	greater the degree of product differentiation.

C.	more significant the barriers to entry.

D.	smaller the number of competitors.

In a cooperative joint monopoly, might one firm decide to cheat to the extent of producing the perfectly competitive level of output?

A.	Yes, because in that way it maximizes its profit in the long run.

B.	Yes, since it would then be in sole possession of the market with more monopoly power than before.

C.	Yes, but only so long as the long-run average cost curve never starts to slope upward.

D.	No, because it would drive its economic profit to zero.

E.	No, because the long-run average cost curve is upward-sloping at that level of output.

In monopolistic competition, the demand curve facing a firm will become more elastic:

A.	the greater the number of sellers.

B.	the smaller the number of sellers.

C.	the greater the degree of product differentiation.

D.	the greater the obstacles to entry.

E.	the greater the elasticity of its supply curve.

In the long run, the monopolistically competitive firm's demand curve pivots ______ with the entrance of rivals into the firm's market, until it becomes tangent to its ________ curve.

A.	upward, long-run marginal cost

B.	upward, long-run average cost

C.	downward, long-run average cost

D.	downward, long-run marginal

E.	downward, marginal revenue cost

Of the four market models, in which two are we not likely to find a great deal of elaborate advertising?

A.	perfect competition and oligopoly

B.	monopoly and oligopoly

C.	perfect competition and monopoly

D.	monopolistic competition and oligopoly

E.	perfect competition and monopolistic competition

The tradeoff inherent in the existence of monopolistic competition: that while there is the cost of _______ there is also the benefit of ________.

A.	over-proliferation of brands, efficient production

B.	inefficient production, production at minimum average total cost

C.	inefficient production, having a variety of brands

D.	over-proliferation of brands, production at minimum average total cost

Suppose that a long-run average cost curve at first slopes downward, and then becomes horizontal for the remainder of its length, with the output at which it first becomes horizontal being 20 percent of the output at which it intersects the market demand curve. This market can support ___________ and so is likely to be _________.

A.	an infinite number of efficient firms, perfectly competitive

B.	up to five efficient firms, perfectly competitive

C.	up to twenty efficient firms, monopolistically competitive

D.	only one efficient firm, a monopoly

E.	up to five efficient firms, an oligopoly

10.

The downward-sloping demand curve of a monopolistic competitor:

A.	reflects product differentiation.

B.	becomes horizontal in the long run.

C.	indicates collusion among the members of the product group.

D.	ensures that the firm will produce at minimum average cost in the long run.

This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.

Which is true about the demand curve of a monopolistically competitive firm?

The demand curve as faced by a monopolistic competitor is not flat, but rather downward-sloping, meaning that the monopolistic competitor, like the monopoly, can raise its price without losing all of its customers or lower its price and gain more customers.

Which statement about monopolistic competition is correct?

Which statement about monopolistic competition is correct? Monopolistic competition involves many firms competing against each other, but selling products that are distinctive in some way.

What happens to demand curve in monopolistic competition?

The demand curve of a monopolistic competitive market slopes downward. This means that as price decreases, the quantity demanded for that good increases. While this appears to be relatively straightforward, the shape of the demand curve has several important implications for firms in a monopolistic competitive market.

What is the shape of the demand curve faced by a firm under monopolistic competition?

The firm under monopolistic competition has downward sloping demand curve. It means a larger amount of the commodity can be sold by merely lowering its prices.

Which statements are correct about the demand curve is faced by a monopolistic competitor?

Which is true about the demand curve of a monopolistically competitive firm?

Which statement about monopolistic competition is correct?

What happens to demand curve in monopolistic competition?

What is the shape of the demand curve faced by a firm under monopolistic competition?

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