Question : 21) Consider the following characteristics of a particular industry: A) an : 1384248

21) Consider the following characteristics of a particular industry:

A) an oligopoly.

B) highly concentrated.

C) monopolistically competitive.

D) perfectly competitive.

E) a cartel.

22) Consider the following characteristics of a particular industry:

A) a monopoly.

B) one where each firm has limited market power.

C) monopolistically competitive.

D) perfectly competitive.

E) a cartel.

23) A characteristic of a monopolistically competitive market is that

A) each firm’s marginal revenue curve lies above its demand curve.

B) the firms in the industry engage in strategic, non-price competition.

C) entry into the industry is difficult.

D) each firm faces a downward-sloping demand curve.

E) the firms sell an identical product.

24) Consider the following characteristics of a particular industry:

A) an oligopoly.

B) a monopoly.

C) monopolistically competitive.

D) perfectly competitive.

E) one where each firm has limited market power.

25) Which of the following are characteristic of a monopolistically competitive market?

A) Firms engage in strategic behaviour.

B) There are many small firms in the industry.

C) Economic profits are often positive in the long run.

D) Each firm faces a horizontal demand curve.

E) All firms are price takers.

26) If there are economic profits in a monopolistically competitive industry, they will generally be competed away through the

A) introduction of brand name products by existing firms.

B) entry of new firms.

C) increasing advertising budgets of existing firms.

D) manipulation of the demand curve.

E) exit of existing firms.

27) Suppose there are many independent dry cleaners in your city, each of which is earning economic profits. According to the theory of monopolistic competition,

A) existing dry cleaners will cooperate and maximize their joint profits.

B) existing dry cleaners will engage in non-price competition and maintain their profits in the long run.

C) existing dry cleaners will expand until they reach the quantity associated with minimum long-run average cost.

D) existing dry cleaners will cooperate and restrict entry of new firms.

E) new dry cleaners will enter this market until each firm is earning zero profits.

28) Suppose there are many independent dry cleaners in your city, each of which provides essentially the same service. However, one offers local delivery, another offers free coffee in the shop, while another offers one-hour dry cleaning. Which of the following statements explains what is happening in this market?

A) These firms are perfectly competitive and are attempting to increase sales and maximize their profits.

B) These firms are oligopolistic and are engaging in strategic behaviour.

C) These firms are perfectly competitive and are engaging in non-price competition.

D) These firms are monopolistically competitive and are attempting to differentiate their product.

E) These firms are perfectly competitive and are engaging in strategic behaviour.

29) In a monopolistically competitive industry, the freedom of entry and exit leads to

A) a negatively sloped demand curve for the industry.

B) strategic behaviour with regard to other firms in the industry.

C) brand proliferation.

D) zero profits in long-run equilibrium.

E) deficient capacity in the industry.

30) Monopolistic competition is similar to perfect competition in that

A) firms in both types of market structures produce a standardized product.

B) strategic behaviour is common to both market structures.

C) neither has significant barriers to entry.

D) each firm faces a horizontal demand curve.

E) firms in both types of market structure engage in non-price competition.