Monopolistic competition

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  • Created by: Jade
  • Created on: 01-12-12 12:41

1. Monopolistically competitive firms have _________ - this is because their products are differentiated.

  • Some price making power
  • Price making power
  • Price taking power
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2. What is monopolistic competition?

  • Monopolistic competition is a market structure with many firms producing a differentiated product where there are few barriers to entry and exit
  • Monopolistic competition is a market structure with a single firm in the industry

3. Given the product differentiation, it should be clear that firms in monopolistic competition compete through ?

  • Non-price competition
  • Price competition

4. Which of these is most similar to monopolistic competition?

  • Taxi services
  • Low cost airlines
  • Agricultural products
  • Local bus services

5. In monopolistic competition, is being productive efficiency achieved?

  • Productive efficiency is not being achieved, since in the short run and long run, the firm is operating on the downward-sloping part of the AC curve
  • Productive efficiency is being achieved, since in the short run and long run, the firm is operating at the lowest point of the AC curve

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