Economics

1)

The demand facing a monopolistically competitive firm is ________ a monopolistic firm and ________ a perfectly competitive firm.

1)

_______

A)

less elastic than; more elastic than

B)

as elastic as; less elastic than

C)

more elastic than; less elastic than

D)

more elastic than; as elastic as

2)

A monopolistically competitive firm

2)

_______

A)

sells a fixed amount of output regardless of price.

B)

can sell an infinite amount of output at the market-determined price.

C)

must raise price to sell more output.

D)

must lower price to sell more output.

Refer to the information provided in Figure 15.1 below to answer the questions that follow. Below are drawn cost curves for Dom’s Barber Shop, a monopolistically competitive firm. Figure 15.1

3)

Refer to Figure 15.1. In this industry in the long run

3)

_______

A)

product demand will decrease so that profits are decreased.

B)

firms will enter until all firms earn a normal profit.

C)

the government will impose price controls to eliminate any economic profits.

D)

firms will continue to earn economic profits.

4)

When some firms exit a monopolistically competitive industry, the demand curves of the remaining firms in the industry

4)

_______

A)

shift downward.

B)

shift to the right.

C)

shift to the left.

D)

do not change.

5)

Monopolistically competitive firms in long-run equilibrium produce at ________ the optimal scale.

5)

_______

A)

less than

B)

sometimes more and sometimes less than

C)

more than

D)

exactly

6)

Assuming no externalities exist, if a good’s price is less than its marginal cost, then the benefits consumers derive are ________ than the cost of resources needed to…

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