A monopolistically competitive industry is like a purely competitive industry in that:
each industry produces a standardized product.
nonprice competition is a feature in both industries.
neither industry has significant barriers to entry.
firms in both industries face a horizontal demand curve.
One difference between monopolistic competition and pure competition is that:
products can be standardized or differentiated in pure competition.
there is some control over price in monopolistic competition.
monopolistic competition has significant barriers to entry.
firms differentiate their products in pure competition.
Which set best describes the basic features of monopolistic competition?
easy entry, few firms, and standardized products
barriers to entry, few firms, and differentiated products
easy entry, many firms, and differentiated products
barriers to entry, many firms, and standardized products
The downward-sloping demand curve of a monopolistic competitor:
reflects product differentiation.
becomes horizontal in the long run.
indicates collusion among the members of the product group.
ensures that the firm will produce at minimum average cost in the long run.
Which would make an individual firm's demand curve less elastic?
the purchase of more efficient machinery
a reduction in the price of the firm's product
increased brand loyalty toward the firm's product
a reduction in advertising expenditures by the firm
A monopolistically competitive firm in the short run is producing where price is $3.00 and marginal cost is $1.50. To maximize profit
the firm should continue to produce this quantity.
the firm should increase output and decrease price.
the firm should decrease output and increase price.
it is unclear what the firm should do without knowing marginal revenue.
A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should:
reduce product price.
increase the level of output.
decrease the level of output.
make no change in the level of output.
In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the firm will:
always earn an economic profit.
set price equal to marginal cost.
set price above marginal cost.
produce at minimum average total cost.
If monopolistically competitive firms in an industry are making an economic profit, then:
new firms will enter the industry and product demand will increase for the existing firms.
firms will exit the industry and product demand will decrease for the firms that remain.
firms will exit the industry and product demand will increase for the firms that remain.
new firms will enter the industry and product demand will decrease for the existing firms.