Reading 20: Monopolistic Competition and Oligopoly - LOS a

答案和详解如下：

1.Which of the following is least likely to be considered a feature that is common to both monopolistic competition and perfect competition?

A)   Extensive advertising to differentiate products.

B)   Zero economic profits in the long run.

C)   Output where marginal revenue equals marginal cost.

D)   Low or no barriers to entry.

The correct answer was A)

The only item listed in the question that monopolistic competition and perfect competition do not have in common is the use of advertising to differentiate their products. Extensive advertising is a key feature of monopolistic competition.

2.Which of the following most accurately describes why firms under monopolistic competition face elastic demand for their products?

A)   High barriers to entry.

B)   The availability of many complementary goods.

C)   Allocative efficiency.

D)   The availability of many close substitutes.

The correct answer was D)

The demand for products from firms competing in monopolistic competition is relatively elastic due to the availability of close substitutes. If a firm increases its product price, it will lose customers to firms selling slightly differentiated products at lower prices.

3.Which of the following regarding monopolistic competition is TRUE?

A)   Zero barriers to entry and exit exist.

B)   The demand curve for an individual firm is a straight horizontal line.

C)   There are very few independent sellers.

D)   Each firm produces a differentiated product.

The correct answer was D)    

Other characteristics of monopolistic competition (also known as competitive price searcher markets) are: a large number of independent sellers, low barriers to entry, and an elastic downward sloping demand curve.

4.Characteristics of monopolistic competition include all of the following EXCEPT:

A)   differentiated products.

B)   high barriers to entry.

C)   large numbers of independent sellers.

D)   downward sloping demand curves.

The correct answer was B)

Monopolistic competition has low barriers to entry.

5.Which one of the following is NOT a characteristic of monopolistic competition?

A)   Differentiated products.

B)   Elastic demand curves.

C)   A single seller.

D)   Low barriers to entry and exit.

The correct answer was C)

All are characteristics of monopolistic competition except "single seller." There are many sellers or producers who face demand curves that slope downward to the right and are elastic; they sell differentiated products that permit firms to attract customers without reducing price; and there are low barriers to entry.