Chapter 8 Market Entry, Monopolistic Competition, and Oligopoly

6) Which of the following is the reason why pharmaceutical firms monopolistically competitive?

A) Pharmaceutical firms sell differentiated products

B) There are many buyers in the market.

C) There are many sellers in the market.

D) There are barriers to entry in the market, like patents.

7) Which of the following is/was an example of a monopolistically competitive firm?

A) Farmer Smith's corn farm

B) Tino's Italian eatery, a local restaurant

C) TCI Cablevision, a supplier of cable television services

D) Northwest Electricity, a supplier of electricity in the Northwest U.S.

8) Which of the following is a characteristic of a monopolistically competitive market?

I. There are many sellers.

II. Firms sell slightly differentiated products.

III. Each firm faces a downward-sloping demand curve.

A) I only

B) I and II only

C) II and III only

D) I, II, and III

9) Which of the following is a characteristic of a monopolistically competitive market?

I. Each firm is a price-taker.

II. Firms sell slightly differentiated products.

III. Each firm faces a downward-sloping demand curve.

A) I only

B) I and II only

C) II and III only

D) I, II, and III

10) Which of the following is a characteristic of a monopolistically competitive market?

I. There are many sellers.

II. Firms sell slightly differentiated products.

III. The demand curve facing each individual firm is horizontal.

A) I and II only

B) I and III only

C) II and III only

D) I, II, and III

11) Which of the following is NOT an example of a monopolistically competitive firm?

A) Farmer Jones's wheat farm

B) the Post Cereal Company

C) Procter and Gamble, a large consumer products corporation

D) T.J.'s Clothes, a local retail clothing store

12) Monopolistically competitive firms doNOT differentiate their products by

A) changing the products' physical characteristics.

B) selling products at different locations.

C) offering different levels of service that come with a product.

D) charging different prices to different groups of consumers.

13) Monopolistically competitive firms differentiate their products by

A) selling products with slightly different physical characteristics.

B) selling products at different locations.

C) creating a special aura or image for the product with advertising.

D) all of the above

14) Monopolistically competitive firms do NOT differentiate their products by

A) selling products at different locations.

B) selling a product with different levels of services accompanying the product.

C) convincing consumers that the product is identical to those sold by competitors.

D) using advertising to create a special aura or image for the product.

15) In Eugene, Oregon, there are several Italian restaurants, each offering slightly different items prepared in slightly different ways. It is likely that an Italian restaurant in Eugene, Oregon, operates in a

A) perfectly competitive market.

B) monopolistically competitive market.

C) monopoly market.

D) oligopoly market.