Question 1

Marginal cost pricing means that goods are offered for sale at prices equal to their marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true about a monopolistically competitive industry?

Accepted Answer

A) Marginal cost pricing occurs. 
B) There is excess capacity. 
C) Resources are allocated efficiently. 
D) It produces at the minimum of ATC. 
A) Marginal cost pricing occurs. 
B) There is excess capacity. 
C) Resources are allocated efficiently. 
D) It produces at the minimum of ATC.

Question 3

In monopolistic competition,a firm

Accepted Answer

A) Has no market power. 
B) Captures significant economies of scale. 
C) Has a downward-sloping demand curve. 
D) Has a standardized product that all firms produce. 
A) Has no market power. 
B) Captures significant economies of scale. 
C) Has a downward-sloping demand curve. 
D) Has a standardized product that all firms produce.

Question 4

Both perfect competitors and monopolistic competitors

Accepted Answer

A) Experience product differentiation. 
B) Earn zero economic profit in the long run. 
C) Find prices pushed to the minimum of long-run ATC by entry. 
D) Use marginal cost pricing. 
A) Experience product differentiation. 
B) Earn zero economic profit in the long run. 
C) Find prices pushed to the minimum of long-run ATC by entry. 
D) Use marginal cost pricing.

Exam 26: Monopolistic Competition

Marginal cost pricing means that goods are offered for sale at prices equal to their marginal cost.

Which of the following is true about a monopolistically competitive industry?

In monopolistic competition,a firm

Both perfect competitors and monopolistic competitors

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