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ECON 2306 EXAM 3 Questions with Correct
Answers | Updated (100% Correct Answers)
Characteristics of monopolistic competition (MC) Answer: -
significant number of sellers
-differentiated product
-promotional activities
-easy entry and exit
monopolistic competition Answer: a market situation in which a
large number of firms produce similar but not identical product
MC demand graph Answer: -slopes downward bc not a perfect
competition
-faces marginal revenue curve downward slope and below demand
curve
-more elastic than monopoly but not perfectly elastic like perfect
competition
product differentiation Answer: the distinguishing of product by
brand name, color, other minor attributes
examples of MC firms Answer: -restaurants
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-convenient stores
profit maximization (MC) Answer: MC = MR
the long run of MC Answer: zero economic profits
-economic losses also disappear
-individual's demand curve will also touch ATC at a particular price
that is profit maximization for that firm
MC marginal rev graph Answer: downward sloping (market power)
MC comp graph profit Answer: When P is below ATC at Q*
MC graph breakeven Answer: when P is equal to ATC at Q*
MC loss Answer: When P is less than ATC at Q* but above AVC
MC shut down Answer: When P is less than AVC at Q*
MC outcomes Answer: MC breaks even in the Lr, MC produces a
lower quantity and charges a higher price than perfect competition,
and MC does not operate at lowest ATC
MC positive results Answer: -not producing the exact same product
-increase choice
-differentiation in product
© 2025 All rights reserved
ECON 2306 EXAM 3 Questions with Correct
Answers | Updated (100% Correct Answers)
Characteristics of monopolistic competition (MC) Answer: -
significant number of sellers
-differentiated product
-promotional activities
-easy entry and exit
monopolistic competition Answer: a market situation in which a
large number of firms produce similar but not identical product
MC demand graph Answer: -slopes downward bc not a perfect
competition
-faces marginal revenue curve downward slope and below demand
curve
-more elastic than monopoly but not perfectly elastic like perfect
competition
product differentiation Answer: the distinguishing of product by
brand name, color, other minor attributes
examples of MC firms Answer: -restaurants
© 2025 All rights reserved
, 2
-convenient stores
profit maximization (MC) Answer: MC = MR
the long run of MC Answer: zero economic profits
-economic losses also disappear
-individual's demand curve will also touch ATC at a particular price
that is profit maximization for that firm
MC marginal rev graph Answer: downward sloping (market power)
MC comp graph profit Answer: When P is below ATC at Q*
MC graph breakeven Answer: when P is equal to ATC at Q*
MC loss Answer: When P is less than ATC at Q* but above AVC
MC shut down Answer: When P is less than AVC at Q*
MC outcomes Answer: MC breaks even in the Lr, MC produces a
lower quantity and charges a higher price than perfect competition,
and MC does not operate at lowest ATC
MC positive results Answer: -not producing the exact same product
-increase choice
-differentiation in product
© 2025 All rights reserved
