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6) Monopolistic competition differs from monopoly because in monopolistic competition A) firms maximize profits. B) firms are free to enter and exit. C) firms set marginal revenue equal to marginal cost to maximize profit. D) All of the above are differences between monopoly and monopolistically competitive firms. E) None of the above are differences between monopoly and monopolistically competitive firms.

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Elin Hessel
Elin HesselLv2
14 Apr 2018
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Related questions

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

 

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

 

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

 

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

A major difference between monopolistic competition and perfect competition is:

a. there are barriers to entry in monopolistic competition. There are no barriers to entry in perfectly competitive markets.

b. monopolistically competitive firms sell differentiated products. Perfectly competitive firms sell identical products.

c. government regulation restricts the ability of monopolistically competitive firms to change their prices. Perfectly competitive firms face no price regulation.

d. the market demand curve in a monopolistically competitive market slopes downward. The market demand curve in a perfectly competitive market is horizontal

2. Analyze the differences and similarities among firms for two different market structures: Monopoly and Monopolistic Competition. Clearly demonstrate how both types of firms determine the quantity (Q) to produce that maximizes profit.

Contrast the long-run profit levels that prevail in Monopoly with those of Monopolistic Competition, and explain clearly why the differences occur.

How do the long-run end-results of Monopoly and Monopolistic Competition compare with the end-results of perfect competition, in terms of the impacts on efficient resource used in the overall economy?

Why do economists make a distinction between “natural monopoly” and “artificial monopoly”? In your answer, be sure to identify how these types of monopoly differ from each other, and why government responses (especially in the US) to these types of monopoly are quite divergent.

Provide an example of an industry that you think is either a monopoly or is monopolistically competitive, and provide reasons as to why you think the category fits that industry.

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