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ECON 411 Chapter 8 Practice #3 Questions with Answers
(100% Correct Answers)
In the model of monopolistic competition, compared to a firm with a
higher marginal cost, a firm with a lower marginal cost will set a
________ price, produce ________ output, and earn ________ profits.
A) higher; more; more
B) lower; less; less
C) higher; less; less
D) lower; more; more
E) higher; less; more Answer: D) lower; more; more
In the model of monopolistic competition, if firms have ________
average cost curves, then opening trade will ________ the total number
of firms and ________ the average price.
A) downward sloping; decrease; decrease
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B) upward sloping; decrease; increase
C) downward sloping; increase; decrease
D) upward sloping; increase; decrease
E) downward sloping; decrease; increase Answer: A) downward
sloping; decrease; decrease
The most common form of price discrimination in international trade
is
A) non-tariff barriers.
B) Voluntary Export Restraints.
C) preferential trade arrangements.
D) product boycotts.
E) dumping. Answer: E) dumping.
In an industry where firms experience internal scale economies, the
long-run cost of production will depend on
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, 3
A) individual firms' fixed costs.
B) the size of the labor force.
C) the size of the market.
D) whether the country engages in inter-industry trade.
E) whether the country engages in intra-industry trade. Answer: C) the
size of the market.
In the model of monopolistic competition, an increase in industry
output will cause individual firms' demand curves to become
________, which will ________ demand for higher-priced goods and
________ demand for lower-priced goods.
A) steeper; reduce; increase
B) flatter; reduce; increase
C) flatter; increase; reduce
D) steeper; increase; reduce
© 2025 All rights reserved
ECON 411 Chapter 8 Practice #3 Questions with Answers
(100% Correct Answers)
In the model of monopolistic competition, compared to a firm with a
higher marginal cost, a firm with a lower marginal cost will set a
________ price, produce ________ output, and earn ________ profits.
A) higher; more; more
B) lower; less; less
C) higher; less; less
D) lower; more; more
E) higher; less; more Answer: D) lower; more; more
In the model of monopolistic competition, if firms have ________
average cost curves, then opening trade will ________ the total number
of firms and ________ the average price.
A) downward sloping; decrease; decrease
© 2025 All rights reserved
,2
B) upward sloping; decrease; increase
C) downward sloping; increase; decrease
D) upward sloping; increase; decrease
E) downward sloping; decrease; increase Answer: A) downward
sloping; decrease; decrease
The most common form of price discrimination in international trade
is
A) non-tariff barriers.
B) Voluntary Export Restraints.
C) preferential trade arrangements.
D) product boycotts.
E) dumping. Answer: E) dumping.
In an industry where firms experience internal scale economies, the
long-run cost of production will depend on
© 2025 All rights reserved
, 3
A) individual firms' fixed costs.
B) the size of the labor force.
C) the size of the market.
D) whether the country engages in inter-industry trade.
E) whether the country engages in intra-industry trade. Answer: C) the
size of the market.
In the model of monopolistic competition, an increase in industry
output will cause individual firms' demand curves to become
________, which will ________ demand for higher-priced goods and
________ demand for lower-priced goods.
A) steeper; reduce; increase
B) flatter; reduce; increase
C) flatter; increase; reduce
D) steeper; increase; reduce
© 2025 All rights reserved
