Practice Exam 4 EC
Because monopoly firms do not have to compete with other firms, the outcome in a market with a
monopoly is often - Answer-is not in the best interest of society, fails to maximize total economic well-
being, and is inefficient
The fundamental source of monopoly power is - Answer-
Which of the following statements is not correct? - Answer-Monopolistic competition is similar to
monopoly because in each market structure the firm can charge a price above marginal costs.
In a market that is characterized by imperfect competition, - Answer-firms are price takers.
Monopolistic competition is characterized by which of the following attributes?(i) free entry(ii) product
differentiation(iii) many sellers - Answer-i and iii only
Which of the following statements is correct? - Answer-Monopolistic competition is similar to monopoly
because both market structures are characterized by patents
For a monopolistically competitive firm, - Answer-marginal revenue and price are the same.
To maximize its profit, a monopolistically competitive firm chooses its level of output by looking for the
level of output at which - Answer-price equals marginal cost
Because monopoly firms do not have to compete with other firms, the outcome in a market with a
monopoly is often - Answer-is not in the best interest of society, fails to maximize total economic well-
being, and is inefficient
The fundamental source of monopoly power is - Answer-
Which of the following statements is not correct? - Answer-Monopolistic competition is similar to
monopoly because in each market structure the firm can charge a price above marginal costs.
In a market that is characterized by imperfect competition, - Answer-firms are price takers.
Monopolistic competition is characterized by which of the following attributes?(i) free entry(ii) product
differentiation(iii) many sellers - Answer-i and iii only
Which of the following statements is correct? - Answer-Monopolistic competition is similar to monopoly
because both market structures are characterized by patents
For a monopolistically competitive firm, - Answer-marginal revenue and price are the same.
To maximize its profit, a monopolistically competitive firm chooses its level of output by looking for the
level of output at which - Answer-price equals marginal cost
