SOLVED

11.1  Demand and Marginal Revenue for a Firm in a Monopolistically Competitive Market 1) One reason why the coffeehouse market is competitive is that A) demand for specialty coffee is very high. B) it is trendy and therefore is likely to have a customer following. C) barriers to entry are low. D) consumption takes place in public. 2) The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because A) barriers to entry are very low. B) there are many firms in the market. C) products are differentiated. D) entry into the market is blocked. 3) The key characteristics of a monopolistically competitive market structure include A) many small (relative to the total market) sellers acting independently. B) all sellers sell a homogeneous product. C) barriers to entry are strong. D) sellers have no incentive to advertise their products. 4) Which of the following characteristics is not common to monopolistic competition and perfect competition? A) Firms act to maximize profit. B) Entry barriers into the industry are low. C) The market demand curve is downward -sloping. D) Firms take market prices as given. 5) Which of the following characteristics is common to monopolistic competition and perfect competition? A) Firms produce identical products. B) Entry barriers into the industry are low. C) Each firm faces a downward -sloping demand curve. D) Firms take market prices as given. 6) A major difference between monopolistic competition and perfect competition is A) the number of sellers in the markets. B) the degree by which the market demand curves slope downwards. C) that products are not standardized in monopolistic competition unlike in perfect competition. D) the barriers to entry in the two markets. 7) The key characteristics of a monopolistically competitive market structure include A) few sellers. B) sellers selling similar but differentiated products. C) high barriers to entry. D) sellers acting to maximize revenue. 8) Which of the following is not an example of a monopolistically competitive market? A) automobile producers B) supermarkets C) video stores D) makers of women’s clothing 9) In monopolistic competition there is/are A) many sellers who each face a downward-sloping demand curve. B) a few sellers who each face a downward-sloping demand curve. C) only one seller who faces a downward-sloping demand curve. D) many sellers who each face a perfectly elastic demand curve. 10) Which of the following is true for a firm with a downward-sloping demand curve for its product? A) Price, average revenue, and marginal revenue are all equal. B) Price, average revenue, and marginal revenue are all different. C) Price equals average revenue but is greater than marginal revenue. D) Price equals average revenue but is less than marginal revenue. 1