Q1. Which of the following is most likely to be considered a characteristic of monopolistic competition?

A)   Inelastic demand curves.

B)   High barriers to entry and exit.

C)   Differentiated products.

Q2. Which of the following most accurately describes why firms under monopolistic competition face elastic demand for their products?

A)   Allocative efficiency.

B)   The availability of many close substitutes.

C)   High barriers to entry.

Q3. Which of the following is least likely to be considered a feature that is common to both monopolistic competition and perfect competition?

A)   Low or no barriers to entry.

B)   Zero economic profits in the long run.

C)   Extensive advertising to differentiate products.

Q4. An oligopoly is charcterized by all of the following EXCEPT:

A)     a large number of sellers.

B)     large economies of scale.

C)     significant barriers to entry.

Q5. Monopolistic competition differs from pure monopoly in that:

A)   monopolistic competitors have low barriers to entry and monopolists do not.

B)   monopolistic competitors are price takers and monopolists are not.

C)   monopolists maximize profits and monopolistic competitors do not.

答案和详解如下：

Q1. Which of the following is most likely to be considered a characteristic of monopolistic competition?

A)   Inelastic demand curves.

B)   High barriers to entry and exit.

C)   Differentiated products.

Correct answer is C)

Differentiated products are a key characteristic of monopolistic competition. Although producers have downward sloping demand curves, they are typically elastic.

Q2. Which of the following most accurately describes why firms under monopolistic competition face elastic demand for their products?

A)   Allocative efficiency.

B)   The availability of many close substitutes.

C)   High barriers to entry.

Correct answer is B)         

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.

Q3. Which of the following is least likely to be considered a feature that is common to both monopolistic competition and perfect competition?

A)   Low or no barriers to entry.

B)   Zero economic profits in the long run.

C)   Extensive advertising to differentiate products.

Correct answer is C)

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.

Q4. An oligopoly is charcterized by all of the following EXCEPT:

A)     a large number of sellers.

B)     large economies of scale.

C)     significant barriers to entry.

Correct answer is A)

Oligopolies consist of a small number of sellers. Their products may be either similar or differentiated.

Q5. Monopolistic competition differs from pure monopoly in that:

A)   monopolistic competitors have low barriers to entry and monopolists do not.

B)   monopolistic competitors are price takers and monopolists are not.

C)   monopolists maximize profits and monopolistic competitors do not.

Correct answer is A)

Another name for monopolistic competition is a competitive price searcher market. Monopolistic competition refers to a large number of independent sellers, each produces a differentiated product, each market has a low barrier to entry, and each producer faces a downward sloping demand curve.

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