Monopolistic Competition MCQs
Monopolistic Competition MCQs
The following Monopolistic Competition MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Monopolistic Competition. We encourage you to answer these multiple-choice questions to assess your proficiency.
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1: In excess capacity the average total cost is _____.
A. Maximized
B. Minimized
C. Reduced
D. Increased
2: A market structure with many firms selling differentiated products is called monopolistic competition.
A. True
B. False
3: Product differentiation is when goods or services are slightly _____ from one another.
A. Different
B. Similar
C. Opposite
D. Conjugative
4: A restaurant does better than nearby restaurants because it is the only one inside a busy train station. What type of product differentiation does this example show?
A. Service
B. Prestige
C. Location
D. Physical differences
5: A firm produces an SUV that is bright red, and a competitor produces one that is maroon. What type of product differentiation does this example show?
A. Service
B. Prestige
C. Location
D. Physical differences
6: Which of the following types of markets would most likely have numerous, fierce competitors?
A. Monopolistic competition
B. Monopolies
C. Perfect competition
D. Oligopolies
7: Which of the following is an accurate statement about monopolistic competition?
A. Firms produce products that are identical.
B. Firms produce products that are somewhat different.
C. Firms are unable to achieve brand dominance.
D. Firms often have little market power.
8: If total revenue is greater than total costs at q*, the firm is generating ______.
A. Zero economic profits
B. Normal economic losses
C. Total economic profits
D. Total economic losses
9: When do the most firms enter a market?
A. When there are volatile economic conditions
B. When there are stable economic conditions
C. When there are economic profits
D. When there are economic losses
10: If many firms producing similar products enter the market, the demand curve for existing firms producing this type of product will become more ______.
A. Unpredictable
B. Stable
C. Elastic
D. Inelastic
11: For Janet’s company last year, the total revenue was $40,000 and the total cost was $50,000 at q*. As a result, Janet’s firm is ______.
A. Earning total economic profits
B. Generating total economic losses
C. Earning a normal rate of return
D. Below equilibrium quantity
12: P* - ATC is used to determine ______.
A. Per unit profits
B. Per unit losses
C. Total profits
D. Total losses
13: In monopolistic competition, many industries ______.
A. Reach allocative efficiency
B. Reach productive efficiency
C. Have too many firms
D. Have too few firms
14: With monopolistic competition, society pays ______ for a product than it costs society to ______ it.
A. More; consume
B. Less; consume
C. More; produce
D. Less; produce
15: Topper Candies accepts a subsidy to continue running. Which of the following most likely caused this?
A. Excess capacity
B. Government regulations
C. False advertising
D. Zero economic profits
16: Which of the following would most likely advertise their products?
A. Differentiated firms
B. Monopolistically competitive firms
C. Monopolies
D. Perfectly competitive firms
17: Which of the following would most likely enhance consumer confidence in the quality of a product?
A. Controversial brand name
B. Unfamiliar brand name
C. New brand name
D. Established brand name
18: By drawing customers away from existing firms, advertising can often ______.
A. Make it easier for firms to enter a market
B. Make it more difficult for firms to enter a market
C. Help firms lower average total costs
D. Help firms increase marginal revenues
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Monopolistic Competition MCQs
