AP Micro - 4.4 - Monopolistic Competition

In a monopolistically competitive industry, there are only a few producers.

• True

• False

In a monopolistically competitive industry, firms have ________ control over the price they sell for.

• a lot of

• very little

• absolutely no

Monopolistically competitive industries have low barriers to entry, meaning it is relatively easy for new firms to enter the market.

• True

• False

Crest toothpaste and Oral-B toothpaste are essentially the same product, but use different branding strategies, logos, and advertisements to make their products unique. This is an example of _________________.

• brand similarity
• market saturation
• advertising duplication
• product differentiation

Firms in a monopolistically competitive market will tend to make __________ long-run profits.

• zero

• positive

• negative

• enormous

Which of the following best describes a monopolistically competitive market?

• Few firms selling identical products
• Many firms selling similar but not identical products
• One firm selling unique products
• Many firms selling identical products

Provide one example of a market that resembles monopolistic competition

Product differentiation, such as advertising, tends to make a product's demand _______ elastic.

• more

• less

This graph shows which of the following

• a perfectly competitive firm making economic losses

• a monopolistically competitive firm make economic losses

• a pure monopoly making economic losses

• a perfectly competitive firm making economic profits

Which of the following is true regarding monopolistically competitive firms?

• they are allocatively INEFFICIENT and productively EFFICIENT

• they are allocatively EFFICIENT and productively INEFFICIENT

• they are allocatively INEFFICIENT and productively INEFFICIENT

• they are allocatively EFFICIENT and productively EFFICIENT