Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition?
In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition.
In perfect competition there are many firms, but in monopolistic competition there are only a few firms.
In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product.
In perfect competition there are few consumers, but in monopolistic competition there are many consumers.
2. Multiple Choice
1 minute
1 pt
Monopolistically competitive firms are considered inefficient in allocating society’s resources for which of the following reasons?
In long-run equilibrium, the marginal benefit exceeds the price charged by the firms.
In long-run equilibrium, the price is greater than the marginal cost.
In long-run equilibrium, average total costs are minimized.
In long-run equilibrium, the firm is earning economic profits.
3. Multiple Choice
1 minute
1 pt
Which of the following market structures results in allocative efficiency?
Monopoly
Monopolistic Competition
Perfect Competition
Oligopoly
4. Multiple Choice
1 minute
1 pt
Which of the following is true of a monopolistically competitive firm in long-run equilibrium?
Price equals marginal cost and average total cost.
Price equals average total cost but is greater than marginal cost.
Price equals marginal cost and is greater than average total cost.
The firm earns positive economic profits by producing at minimum average cost.
5. Multiple Choice
1 minute
1 pt
The demand curve for a monopolistically competitive firm is downward sloping because:
the products produced by different firms are not identical
there are a large number of firms
the product is produced by using scarce resources
it is easy for firms to enter or exit the market
6. Multiple Choice
1 minute
1 pt
The graph shows a monopolistically competitive firm:
making a profit in the short-run
incurring a loss in the short-run
making a profit in the long-run
breaking even in the long-run
7. Multiple Choice
1 minute
1 pt
In the long-run, the ATC will be tangent to the demand curve at:
Q1
Q2
Q3
none of the above
8. Multiple Choice
1 minute
1 pt
Which of the following is true of a monopolistically competitive firm in long-run equilibrium?
The firm produces the allocatively efficient level of output.
The firm produces an output level that minimizes average total cost.
The firm produces in the inelastic range of its demand curve.
The firm is allocatively inefficient, because it produces an output level at which price is greater than marginal cost.
9. Multiple Choice
2 minutes
1 pt
Let P = price, MR = marginal revenue, MC = marginal cost, and ATC = average total cost. In monopolistic competition, which of the following most accurately describes the long-run equilibrium conditions for a firm?
P>ATC, MR=MC, and P>MC
P=ATC, MR=MC, and P=MC
P=ATC, MR=MC, and P>MC
P=ATC, MR>MC, and P>MC
10. Multiple Choice
1 minute
1 pt
A monopolistically competitive firm advertises in order to:
shift the demand curve for its product to the left
make its product more similar to its competitors’
reduce the industry’ s barriers to entry
make the demand for its product less price elastic
11. Multiple Choice
1 minute
1 pt
Over the past 5 years, 50 new restaurants have opened and 30 have closed in the city of Zuni. Currently there are 110 restaurants operating in the city. Which of the options best represents the market structure, barriers to entry, and economic profits in the long run?
A
B
C
D
12. Multiple Choice
3 minutes
1 pt
The following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale. If the two firms do not cooperate, what will be the profit for each firm?
Agronomia = $50; Farmingdale = $100
Agronomia = $150; Farmingdale = $150
Agronomia = $300; Farmindale = $50
Agronomia = $100; Farmingdale = $100
13. Multiple Choice
20 seconds
1 pt
An industry that is dominated by a few large firms is
monopolistic competition.
a monopoly.
perfect competition.
an oligopoly.
14. Multiple Choice
20 seconds
1 pt
Which market structure is BEST indicated by the soda market?
monopoly
pure competition
oligopoly
natural monopoly
15. Multiple Choice
30 seconds
1 pt
A formal organization of sellers or producers who regulate the production, pricing, and marketing of a product
Imperfect competition
Monopoly
Cartel
Market structure
16. Multiple Choice
1 minute
1 pt
Businesses can "Collude" or work together to set prices
Oligopoly
Monopoly
Perfect Competition
17. Multiple Choice
1 minute
1 pt
Pepsi, Coca Cola
Oligopoly
Monopoly
Perfect Competition
18. Multiple Choice
30 seconds
1 pt
This is an illegal practice of an oligopoly working together to set prices.
collusion
monopolistic competition
competitive pricing
priceline negotiation
19. Multiple Choice
20 seconds
1 pt
Which market structure has the MOST competition?
oligopoly
monopoly
perfect competition
monopolistic competition
20. Multiple Choice
45 seconds
1 pt
What is not part of perfect competition?
buyer/ seller are well informed
sellers cannot enter/ exit market easily
low prices
few barriers of entry
21. Multiple Choice
30 seconds
1 pt
The marginal cost curve typically does which of the following?
Increases at a fixed rate.
Decreases and eventually increases.
Decreases at a decreasing rate.
Increases and eventually decreases.
22. Multiple Choice
30 seconds
1 pt
Term for costs that change with production
Fixed Cost
Average Cost
Variable Cost
Marginal Cost
23. Multiple Choice
30 seconds
1 pt
When marginal revenue equals marginal cost, a perfectly competitive firm is
determining the price it will set.
maximizing its revenues
establishing its shutdown point
maximizing its profit.
24. Multiple Choice
5 minutes
1 pt
If competition is inconvenient and impractical, what kind of monopoly tends to develop?
natural monopoly
geographic monopoly
technological monopoly
government monopoly
25. Multiple Choice
30 seconds
1 pt
Extra cost of producing one more unit
Marginal cost
Variable Cost
Fixed Cost
Average Cost
26. Multiple Choice
30 seconds
1 pt
ATC x ___=TC
Variable Cost
Quantity
Price
None of the Above
27. Multiple Choice
2 minutes
1 pt
Tony opens up a hot chocolate stand for two hours. He spends $10 for ingredients and sells $60 worth of tasty beverages. In the same two hours, he could have provided Uber services (illegally because he isn't 18) and earned $40. Tony's accounting profit is ____ and an economic profit of ____.