1. In the long run perfect competition firms produce at the efficient scale whil
ID: 1250823 • Letter: 1
Question
1.
In the long run perfect competition firms produce at the efficient scale while Monopolistically Competitive firms have excess capacity
A) True
B) False
2.
In the long run, firms in Monopolistically Competitive markets produce at the minimum of their average total cost curve
A) True
B) False
3.
Economists contend that advertising provides new firms with the means to attract customers from existing firms.
A) True
B) False
4.
Monopolistic Competition is a market structure where few firms sell similar products
A) True
B) False
5.
Monopolistic Competitive firm engages in product differentiation
A) True
B) False
6.
Monopolistically Competitive firms do not create dead weight loss
A) True
B) False
7.
The Monopolistic Competitive firm is similar to the perfectly competitive firm in that they both break even in the long run
A) True
B) False
8.
SImilar to monopoly, Monopolistically Competitive firms face a down-sloping demand curve
A) True
B) False
9.
The Monopolistic Competitive firm is a price maker
A) True
B) False
10.
Monopolistic Competitive firm makes economic profit in the long run
A) True
B) False
Explanation / Answer
Please limit your questions to around 3 per post at most. 1. In the long run perfect competition firms produce at the efficient scale while Monopolistically Competitive firms have excess capacity B) False ; In the long run, both perfect competition and monopolistic competition results in efficient scale because monopolistic competition cannot prevent free entry. A firm can enter and produce *almost* exactly the same product. This dilutes market power in the long run. 2. In the long run, firms in Monopolistically Competitive markets produce at the minimum of their average total cost curve A) True ; Such that price is equal to marginal cost and average total cost. Zero economic profit in long run. 3. Economists contend that advertising provides new firms with the means to attract customers from existing firms. A) True ; Yep, we do. :) 4. Monopolistic Competition is a market structure where few firms sell similar products B) False ; Many firms sell different products. 5. Monopolistic Competitive firm engages in product differentiation A) True ; That's what makes them monopolists over their own slightly-different product. 6. Monopolistically Competitive firms do not create dead weight loss A) True ; Not in the long run. Can't prevent entry. 7. The Monopolistic Competitive firm is similar to the perfectly competitive firm in that they both break even in the long run A) True ; Yep, can't prevent entry. 8. SImilar to monopoly, Monopolistically Competitive firms face a down-sloping demand curve A) True ; Yes, because they enjoy brand preferences. 9. The Monopolistic Competitive firm is a price maker A) True ; That is what a downward sloping demand curve indicates. Brand preferences make them price makers. 10. Monopolistic Competitive firm makes economic profit in the long run B) False ; Can't limit entry.
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