What is an assumption of the model of monopolistic competition?
None of these: There are significant barriers to entry in the market, Each firm sells an identical product, Consumers lack adequate information about the prices and qualities of products, There are only a few firms in the industry.
In monopolistic competition, firms
attempt to differentiate their products through advertising or trivial product changes.
Which of the following is not a characteristic of firms in a monopolistically competitive market?
Existence of large economies of scale
The market structure called monopolistic competition is named using both monopoly and perfect competition. Why?
There are many firms with easy entry and exit but each firm sells a unique product
What distinguishes monopolistic competition from perfect competition?
In monopolistic competition each firm sells a slightly different or unique product. That is not the case in perfect competition.
Monopolistic competition is similar to monopoly in that
each firm faces a downward-sloping demand curve.
Monopolistic competition is similar to perfect competition in that
entry into and exit from the market is easy.
In the context of market structure, the characteristic that best describes a monopolistically competitive market is
firms spend a great deal on advertising and promotion.
Because each firm in monopolistic competition produces a unique product,
each has a "mini" monopoly over its product.
Which of the following statements about the monopolistically competitive market in the long run is not true?
Its output level is greater than the output level corresponding to minimum ATC.
A monopolistically competitive market is characterized by
many firms selling similar but differentiated products.
Perfect competition and monopolistic competition are alike in all the following ways except
the type of product produced.
Which of the following statements is true?
In monopolistically competitive markets, economic profits will eventually lead to the entry of new firms.
In monopolistic competition, firms can continue to earn economic profits in the long run without the threat of entry from new firms.
In the spring of 2003, Coke introduced a new drink called Vanilla Coke. In the summer of 2003, Pepsi responded by marketing its own brand of Pepsi Vanilla. Such moves by firms are known as
Which of the following is an example of product differentiation?