Monopolistic competition

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

1. Non-price competition is competition between firms on the basis, of, for example, branding, customer service, location, range of products, advertising are indicative of how firms seek to gain market share.

  • True
  • False
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2. 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

3. Allocative efficiency is being achieved

  • False
  • True

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

  • Some price making power
  • Price making power
  • Price taking power

5. Which of these is NOT a characteristic of monopolistic competition

  • Low barriers to entry and exit
  • Firms are price takers
  • Many small buyers and sellers with a small market share
  • Good knowledge
  • Non-homogeneous products
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