5. A common example of monopolistic competition is the market for: Select one: a

Question

5. A common example of monopolistic competition is the market for:
Select one:
a. gasoline for cars.
b. cable TV service.
c. mandarin oranges.
d. automobiles.

6.

Table: Spring Water

Reference: Ref 15-12 Table: Spring Water

Table: Spring Water. The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. The profit-maximizing price is:

Select one:

a. $5.

b. $10.

c. $16.

d. $3.

7. An example of monopolistic competition is the _____ industry.
Select one:
a. soft-drink
b. automobile
c. airline
d. restaurant

8. Because most communities have a large number of similar but not identical substitutes, the market for chiropractors is BEST considered to be:
Select one:
a. a monopoly.
b. an oligopoly.
c. monopolistically competitive.
d. perfect competition.

9. The demand curve for a firm in monopolistic competition is _____ facing a perfectly competitive firm.
Select one:
a. downward sloping, unlike the horizontal demand curve
b. horizontal, unlike the downward-sloping demand curve
c. horizontal, the same as that
d. downward sloping, the same as that

10. Because of the lack of substitutes, the market for a newly developed and freshly patented prescription drug is BEST considered to be:
Select one:
a. in monopolistic competition.
b. in perfect competition.
c. a monopoly.
d. an oligopoly.

Quantity
(Cases) Price Total
Revenue Marginal
Revenue Marginal
Cost Average
Total
Cost Total Cost 0 $16 $0 $25 $15 $10 1 $15 $15 35.00 $35 $13 $6 2 $14 $28 20.50 $41 $11 $4 3 $13 $39 15.00 $45 $9 $2 4 $12 $48 11.75 $47 $7 $3 5 $11 $55 10.00 $50 $5 $3 6 $10 $60 8.83 $53 $3 $5 7 $9 $63 8.29 $58 $1 $9 8 $8 $64 8.38 $67

Explanation / Answer

5. a gasoline for cars

Gasoline for cars is an example of monopolistic competition as there are large number of sellers selling differentiated quality.

6) b. 10 is correct

Profit is maximised at MR=MC or MR is greater than MC and the difference between MR and MC is minimum.

At price=10, MR= 5 and MC=3 satisfies the condition.

7) d. Restaurant

There are large number of restaurants selling different type of food with different tastes.

8) c. Monopolistic competitive

In monopoly competition, there are large number of sellers selling similar but not identical goods.

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