Question 1

Because of the existence of a large number of similar but not identical substitutes in most communities, the market for financial planners is best considered to be:
A)a monopoly.
B)an oligopoly.
C)a perfect competition.
D)monopolistically competitive.

Accepted Answer

The existence of a large number of similar but not identical substitutes in most communities implies that the market for financial planners is monopolistically competitive. Monopolistic competition is a type of market structure characterized by a large number of small firms selling similar but not identical products, easy entry and exit of firms, and some control over price by individual firms due to product differentiation.

Question 2

Monopolistic competition describes an industry characterized by a ________ number of firms producing products with for firms.
A)small; identical; barriers to entry
B)small; similar; relatively easy entry .
C)large; similar; relatively easy entry .
D)large; identical; relatively easy entry

Accepted Answer

Monopolistic competition is characterized by a large number of firms producing products that are similar but not identical, and there are relatively easy barriers to entry. This means that while there is competition in the market, firms are still able to differentiate their products to a certain extent and enter the market without facing significant barriers. Option A is incorrect because the products are not identical, and there are relatively easy barriers to entry. Option B is incorrect because the products are not identical, but they are only similar, and there are relatively easy barriers to entry. Option D is incorrect because the products should be similar, but not identical.

Question 3

A monopolistically competitive industry is characterized by a:
A)small number of firms producing identical products, with barriers to entry for firms.
B)small number of firms producing similar products, with relatively easy entry for firms.
C)large number of firms producing similar products, with relatively easy entry for firms.
D)large number of firms producing identical products, with relatively easy entry for firms.

Accepted Answer

A monopolistically competitive industry consists of a large number of firms that produce similar products, which differentiates their goods from those of their rivals in some way. Relative ease of entry for firms is also a characteristic of monopolistic competition which means firms can easily enter or exit the industry. Therefore, option C is the correct answer.

Question 4

Which of the following is not a characteristic of monopolistic competition? product differentiation

Accepted Answer

The answer of Which of the following is not a...

Question 5

Which of the following industries is most likely to be monopolistically competitive?
A)automobile production
B)fresh bagel shops
C)corn farming
D)electric utility production

Accepted Answer

Monopolistic competition occurs when there are many small firms selling differentiated products, which means there is a degree of product differentiation and firms have some control over price. Fresh bagel shops fit this description, as there are many small shops that sell slightly different types of bagels, such as plain, sesame seed, everything, etc. Automobile production, corn farming, and electric utility production, on the other hand, are more likely to be either oligopolistic or monopolistic due to significant barriers to entry and high economies of scale.

Question 6

A market structure characterized by many competitors, each producing identical products, with free entry and exit into the industry, is described as a(n):
A)monopolistically competitive industry.
B)oligopoly.
C)perfectly competitive industry.
D)monopoly.

Accepted Answer

The characteristics described in the question - many competitors, identical products, free entry and exit - are all hallmarks of a perfectly competitive industry. Monopolistically competitive industries have many competitors, but their products are not identical. Oligopolies have few dominant firms in the market. Monopolies have only one dominant firm with significant barriers to entry.

Question 7

In monopolistic competition:
A)there is free entry and exit in the long run.
B)each firm produces a standardized product.
C)there are few producers.
D)there are barriers to entry.

Accepted Answer

In monopolistic competition, there is free entry and exit in the long run, meaning that new firms can enter or existing firms can exit the market without facing significant barriers. This leads to a relatively large number of producers, each of whom can differentiate their products to some extent. Therefore, choices B, C, and D are incorrect.

Question 8

An industry characterized by many firms producing similar but differentiated products in a market with easy entry and exit is called:
A)perfect competition.
B)monopoly.
C)monopolistic competition.
D)oligopoly.

Accepted Answer

The industry described here has many firms producing similar but differentiated products, which is a characteristic of monopolistic competition. This type of market also has easy entry and exit, further supporting the answer choice of C. Perfect competition would have identical products and no differentiation, while monopoly would have only one firm dominating the market. Oligopoly would have a small number of firms with significant market power. The industry described is characterized by many firms, meaning it is not a monopoly or oligopoly. The products are similar but differentiated, which is a feature of monopolistic competition. Finally, the easy entry and exit suggests that there are few barriers to entry or exit, a characteristic of monopolistic competition. Therefore, the answer is C, monopolistic competition.

Question 9

Monopolistic competition is an industry structure characterized by:
A)a product with no close substitutes.
B)a horizontal demand curve.
C)a large number of firms.
D)barriers to entry and exit.

Accepted Answer

Monopolistic competition is characterized by a large number of firms, each producing slightly differentiated products. This differentiation leads to some market power for individual firms, but there are still close substitutes available, leading to a downward sloping, but relatively elastic, demand curve. There are typically no significant barriers to entry or exit in monopolistic competition.

Question 10

In monopolistic competition, each firm:
A)is a price-taker.
B)has some ability to set the price of its differentiated good.
C)will set price equal to marginal cost.
D)has marginal revenue that is greater than price.

Accepted Answer

In monopolistic competition, each firm has some ability to set the price of its differentiated good. This is because firms are producing goods that are similar but not identical to other firms, allowing them to have some market power and differentiate their products through branding and marketing. However, this power is limited due to the presence of close substitutes in the market, which means that firms must account for the price sensitivity of consumers when setting prices. In monopolistic competition, firms have some ability to set the price of their differentiated product based on market conditions and brand differentiation. However, this ability is limited as there are close substitutes available in the market. Therefore, they cannot set their price too high as they risk losing their customers to their rivals.

Question 11

Monopolistic competition is similar to perfect competition because firms in both market structures:
A)are price-takers.
B)produce goods that are perfect substitutes.
C)find it beneficial to advertise.
D)do not face any barriers to entry into the industry in the long run.

Accepted Answer

In both monopolistic competition and perfect competition, there are no barriers to entry in the long run, allowing firms to enter and exit the market freely.

Question 12

A feature of monopolistic competition that makes it different from monopoly is the:
A)fact that firms in monopolistically competitive industries follow the marginal decision rule, while monopolies do not.
B)downward-sloping demand curve.
C)downward-sloping marginal revenue curve.
D)number of firms in the industry.

Accepted Answer

Monopolistic competition is characterized by a large number of firms operating in the market, whereas a monopoly has one dominant firm controlling the entire market. While both have a downward-sloping demand curve and marginal revenue curve, the number of firms in the industry is the key difference. The marginal decision rule applies to both types of market structures. Monopolistic competition is characterized by a large number of firms in the industry, while a monopoly has only one firm. The other choices are not distinguishing features between monopolistic competition and monopoly.

Question 13

A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:
A)firms in both types of industries produce identical products.
B)firms in both types of industries produce similar but not identical products.
C)barriers to entry in both industries are large.
D)there are many firms in each industry.

Accepted Answer

Both monopolistically competitive and perfectly competitive industries are characterized by the presence of many firms.

Question 14

The wedding dress industry is monopolistically competitive.As a result, which of the following conditions applies to this industry?
A)There are thousands of dress suppliers, all selling identical products.
B)Dresses tend to be differentiated among the many sellers serving this market.
C)There is freedom of entry but not exit in this industry.
D)Prices tend to be lower than if the dress industry approximated perfect competition.

Accepted Answer

Monopolistic competition is characterized by a large number of firms that sell similar but not identical products. In the wedding dress industry, there are many dress suppliers, but their dresses tend to be differentiated in terms of design, quality, and price. Therefore, option B is the correct answer. Option A is incorrect because there is no identical product in this industry. Option C is incorrect because there is no obstacle to exit the industry if the supplier earns losses. Option D is incorrect because prices tend to be higher than if the industry approximated perfect competition due to product differentiation.

Question 15

Because of the existence of a large number of similar but not identical substitutes in most communities, the market for chiropractors is best considered to be:
A)an oligopoly.
B)a perfect competition.
C)monopolistically competitive.
D)a monopoly.

Accepted Answer

The market for chiropractors is best considered to be monopolistically competitive. This is because there are a large number of similar but not identical substitutes available in most communities, such as massage therapy, physical therapy, and acupuncture. This creates competition among chiropractors to differentiate themselves through advertising, price, and quality of service. However, chiropractors are not in a perfect competition as there are some barriers to entry, such as the cost of education and licensing requirements. It is also not an oligopoly or monopoly as there are multiple firms competing in the market.

Question 16

Which of the following describes a feature shared by both monopolistic competition and perfect competition?
A)few firms competing in the industry
B)no barriers to entry or exit in the long run
C)absolute market power
D)standardized products

Accepted Answer

Both monopolistic competition and perfect competition involve no barriers to entry or exit in the long run. In monopolistic competition, firms are able to enter and exit the market easily in response to profits, while in perfect competition, there are so many firms that no single firm has the ability to control the market or prevent new firms from entering. Few firms competing in the industry (A) and absolute market power (C) are features that are specific to monopolistic competition and not present in perfect competition. Standardized products (D) are a feature of perfect competition, but not of monopolistic competition.

Question 17

In large shopping malls, the retail market is most illustrative of:
A)monopolistic competition.
B)monopoly.
C)perfect competition.
D)perfect oligopoly.

Accepted Answer

The retail market in large shopping malls is characterized by monopolistic competition, as there are many stores selling similar or related products, but each store has some degree of product differentiation or unique selling points to set them apart from their rivals. This creates some level of market power and differentiation for each store, but it is not a complete monopoly or perfect competition.

Question 18

The downward-sloping demand curve for a monopolistically competitive firm:
A)reflects product differentiation.
B)eventually will become perfectly elastic as more firms enter.
C)indicates collusion among firms in the industry.
D)ensures that the firm will produce at minimum average cost in the long run.

Accepted Answer

The downward-sloping demand curve for a monopolistically competitive firm reflects product differentiation. This means that the firm's product is different from its competitors, and as a result, some consumers are willing to pay a higher price for it. The demand curve is downward-sloping because as the price increases, the quantity demanded decreases. The downward-sloping demand curve for a monopolistically competitive firm reflects product differentiation. Monopolistically competitive firms produce differentiated products, which means that consumers are willing to pay different prices for different products based on characteristics such as quality, design, or branding. This leads to a downward-sloping demand curve because as the price of the firm's product increases, the quantity demanded decreases.

Question 19

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit of firms is:
A)a monopoly.
B)a duopoly.
C)an oligopoly.
D)monopolistically competitive.

Accepted Answer

A monopolistically competitive market is characterized by a large number of relatively small firms producing differentiated products. There is easy entry and exit of firms, meaning that new firms can easily enter the market and existing firms can exit if they are not making a profit. This type of market structure is different from a monopoly, where there is only one firm in the market, a duopoly where there are only two firms, and an oligopoly where a small number of large firms dominate the market. The given description matches the characteristics of a monopolistically competitive market. In such a market, there are many firms producing differentiated products, and there are generally low barriers to entry or exit.

Question 20

For the monopolistically competitive wild-caught seafood market, the demand curve for any individual firm is , and there are producers of seafood.
A)downward sloping; few .
B)upward sloping; many .
C)vertical; few
D)downward sloping; many

Accepted Answer

The demand curve for monopolistically competitive firms is downward-sloping, as they face competition from other similar firms. There are many producers in the wild-caught seafood market, hence the answer is D - downward sloping; many. The demand curve facing an individual firm in a monopolistically competitive market is downward sloping, meaning that as the firm increases its price, it will sell fewer units. In addition, there are many firms in a monopolistically competitive market, so choice D is the correct answer.

Quiz 15: Monopolistic Competition and Product Differentiation

Because of the existence of a large number of similar but not identical substitutes in most communities, the market for financial planners is best considered to be:

Monopolistic competition describes an industry characterized by a ________ number of firms producing products with for firms.

A monopolistically competitive industry is characterized by a:

Which of the following is not a characteristic of monopolistic competition? product differentiation

Which of the following industries is most likely to be monopolistically competitive?

A market structure characterized by many competitors, each producing identical products, with free entry and exit into the industry, is described as a(n) :

In monopolistic competition:

An industry characterized by many firms producing similar but differentiated products in a market with easy entry and exit is called:

Monopolistic competition is an industry structure characterized by:

In monopolistic competition, each firm:

Monopolistic competition is similar to perfect competition because firms in both market structures:

A feature of monopolistic competition that makes it different from monopoly is the:

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

The wedding dress industry is monopolistically competitive.As a result, which of the following conditions applies to this industry?

Because of the existence of a large number of similar but not identical substitutes in most communities, the market for chiropractors is best considered to be:

Which of the following describes a feature shared by both monopolistic competition and perfect competition?

In large shopping malls, the retail market is most illustrative of:

The downward-sloping demand curve for a monopolistically competitive firm:

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit of firms is:

For the monopolistically competitive wild-caught seafood market, the demand curve for any individual firm is , and there are producers of seafood.