ECON101 Study Guide - Midterm Guide: Demand Curve, Economic Equilibrium, Monopolistic Competition

2) One factor that distinguishes a monopoly from monopolistic competition is that A) barriers to exit exist in monopolistic competition. B) firms in monopolistic competition practice collusion. C) firms are price-takers in monopolistic competition. D) no barriers to entry exist in a monopoly. E) close substitutes are available in monopolistic competition.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Toronto has a large number of retail stores that sell clothes. Each store has its own characteristics 1) which differ from the other stores. The clothing business in Toronto is an example of A) a perfectly competitive market. B) a monopoly. C) a monopolistically competitive market. D) a duopoly. E) an oligopoly.

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution