Exam notes

Topics: Perfect competition, Economics, Imperfect competition Pages: 2 (896 words) Published: September 30, 2014

Session 12

08 August 2014

Exercise 1 - MCQs: Imperfect Competition and Monopolistic Competition (11.2 and 11.3) 1) Which of the following products is best considered a differentiated product? A) wheat
B) steel
C) soap
D) petrol
2) A characteristic common to most imperfectly competitive markets is A) inelastic market demand curves.
B) a homogeneous product.
C) non-price competition among firms.
D) common pricing among firms.
3) In an imperfectly competitive market, changes in market conditions are often signalled to the individual firms by a change in the
A) firm's sales.
B) price of the product.
C) government policy.
D) cost conditions.
4) A monopolistically competitive firm and a monopoly are similar because A) both firms will earn zero profits in the long run.
B) both firms always operate at their point of minimum average total cost. C) each firm can raise its price without losing all of its sales. D) both firms must behave strategically toward other firms in the industry. 5) One difference between perfect competition and monopolistic competition is that A) there are no barriers to entry in monopolistic competition. B) there are no barriers to exit in monopolistic competition. C) there is no product differentiation in perfect competition. D) there is no product differentiation in monopolistic competition. 6) A characteristic of a monopolistically competitive market is that A) each firm's marginal revenue curve lies above its demand curve. B) the firms in the industry engage in strategic, non-price competition. C) entry into the industry is difficult.

D) each firm faces a downward-sloping demand curve.
7) Which of the following are characteristic of a monopolistically competitive market? A) Firms engage in strategic behaviour.
B) There are many small firms in the industry.
C) Economic profits are often positive in the long run.
D) Each firm faces a horizontal demand curve.
8) Suppose there are many independent dry cleaners...
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