1 - Monopolistic competition and perfect competition are different in that
A- only monopolistically competitive firms can earn economic losses in the short-run.
B- only perfectly competitive firms are characterized by long-run economic profits of zero.
C- only monopolistically competitive firms advertise.
D- only perfectly competitive firms maximize profits where marginal revenue equals marginal cost.
2- A monopolistic competitor is like a competitive firm in the long run, because
A- both firms will earn positive economic profits.
B- it earns positive economic profits.
C- it earns zero economic profits
D- both firms will increase price to increase profits.
3- Products such as office supplies are examples of
A- experience goods.
B- search goods.
C- selective goods.
D- simple goods.
4- The demand curve for a monopolistically competitive firm is
A- horizontal.
B- less elastic than the demand curve of the perfectly competitive firm.
C- the same as the industry demand curve.
D- more elastic than the demand curve of the perfectly competitive firm.
5- Monopolistic competitors advertise because
A- they have downward sloping demand curves.
B- they can earn long-run profits if they advertise.
C- the demand curves they face are very elastic.
D- they produce goods that can be differentiated from the goods of other firms in the industry.
6- The monopolistically competitive firm maximizes profit by producing to the point at which
A- ATC = AVC.
B- MR = AR.
C- MC = MR.
D- MC = AR.
7- Because the short-run average total cost curve slopes downward for an information product, the firm experiences
A- short-run economies of operation.
B- a downward sloping average variable cost curve.
C- long-run diseconomies of scale.
D- a downward sloping marginal cost curve.