ECON 200 Chapter Notes - Chapter 15: Marginal Revenue, Demand Curve, Competitive Equilibrium

39 views4 pages

lemonsnail891

25 Feb 2015

School

University of Maryland

Department

Economics

Course

ECON 200

Professor

Cindy Clements

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Monopolistic competition- a market with many firms that sell goods and services that are similar, but slightly different. Can exist when there are many small firms. Product differentiation- the creation of products that are similar to competitors" products but more attractive in some ways. Products have substitutes that are close but not perfect. Consumers might be willing to pay a bit extra, but if the price differential is too large, they will choose a substitute product instead. Product differentiation enable firms in a monopolistic competitive market to produce a good for which there are no exact substitutes. Allows a firm to behave like a monopolist. Firms face a downward-sloping demand curve, a monopolistically competitive firm cannot adjust its price without causing a change in the quantity consumers demand. Assuming that production involves both fixed and marginal costs, firms face a u-shaped average total cost (atc) curve.

Related Questions

25. One difference between perfect competition and monopolistic competition is A) firms in a perfectly competitive market produce similar but slightly different products. B) in perfect competition, the product produced has no close substitutes. C) monopolistic competition has barriers to entry, whereas perfect competition has none. D) a small number of firms compete in a monopolistically competitive market and a large number of firms compete in a perfectly competitive market. E) firms in monopolistic competition have some degree of market power.

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

crimsonalligator541

36) Which one of the following statements describes a market that is monopolistically competitive? A) The presence of significant barriers to entry. B) The products produced by the firms are identical. C) Many firms compete by making similar but slightly different products. D) There is a small number of large firms. E) The product produced by one firm has no close substitutes.

ECON 200 Chapter Notes - Chapter 15: Marginal Revenue, Demand Curve, Competitive Equilibrium

Document Summary

Get access

Related Documents

ECON 200 Chapter Notes - Chapter 16: Monopolistic Competition, Imperfect Competition, Demand Curve

ECON 200 Lecture Notes - Lecture 21: Monopolistic Competition, Oligopoly, Perfect Competition

ECON 200 Lecture 19: Beginning of Chapter 15

Related Questions