Deck 15: Monopolistic Competition and Non-Price Competition

Question 1

In monopolistic competition:

A) There are a few firms.
B) There are many firms.
C) There are two firms.
D) There is one firm.

Answer 1

B

Question 2

In monopolistic competition:

A) Products are homogeneous.
B) Products are differentiated.
C) There are barriers to entry.
D) Demand is upward sloping.

Answer 2

B

Question 3

In the short run firms in monopolistic competition:

A) Can only make normal profits.
B) Face upward sloping demand curves.
C) Produce where marginal revenue equals average fixed costs.
D) Can make abnormal profits or losses.

Answer 3

D

Question 4

If a firm is making abnormal profits in the short run in monopolistic competition:

A) Some firms will leave the industry.
B) Some firms will enter the industry increasing costs and increasing demand.
C) Some firms will enter the industry shifting demand for the established firms' products to the left.
D) Some firms will enter the industry reducing the total supply in the market.

Question 5

In the long run firms in monopolistic competition:

A) Always make abnormal profits.
B) Are always allocatively efficient.
C) Are always productively efficient.
D) Aim to profit maximize.

Question 6

Which is not one of Porter's five forces?

A) Entry threat
B) Buyer power
C) Supplier power
D) Innovation

Question 7

Firms are more likely to make higher profits if:

A) The entry threat is high.
B) Buyer power is high.
C) Supplier power is high.
D) Rivalry is low.

Question 8

Firms in monopolistic competition are productively and allocatively inefficient.

Question 9

There is no entry and exit of firms in the long run in monopolistic competition.

Question 10

Profit-maximizing firms in monopolistic competition produce where marginal revenue equals marginal ____.

Question 11

Which of the following is associated with a monopolistically competitive market structure?

A) Mobile phones
B) Supermarket
C) Petrol Station
D) Cafes

Question 12

In a monopolistically competitive market, abnormal profit will:

A) Increase the number of suppliers and increase demand for each firm.
B) Increase the number of suppliers and decrease demand for each firm.
C) Decrease the number of suppliers and increase demand for each firm.
D) Decrease the number of suppliers and decrease demand for each firm.

Question 13

The marketing mix consists of:

A) Performance, Quality, Location, Placement
B) Price, Quality, Presentation, Promotion
C) Profit, Placement, Prestige, Performance
D) Price, Product, Place, Promotion

Question 14

Brand loyalty is used in order to try and:

A) Make customers more sensitive to price.
B) Make customers less sensitive to price.
C) Make customers more price elastic.
D) None of the above.