Question

1) In monopolistic competition:

A. when some firms exit, the demand curve for the firms that remain in the industry shifts to the left.

B. firms may advertise to increase demand for their product.

C. firms earn large economic profits in the long run.

D. entry of new firms shifts the demand curve for existing firms to the right.

2)

Monopolistic competition describes an industry characterized by:

A. barriers to entry and exit.

B. a small number of firms.

C. a product with many close substitutes.

D. a horizontal demand curve.

3.)

The price for a firm under monopolistic competition is _____ revenue.

A. greater than total

B. equal to marginal

C. less than marginal

D. greater than marginal

Answer 1

Q1
Answer
Option B
a firm under monopolistic competition do advertisements to differentiate the product and to make brand values
the exit of some firms will shift the other firm's curve to right and vice versa
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Q2
C. a product with many close substitutes
The market has many close substitutes because the goods are differentiated in quantities and brand names
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Q3
D. greater than marginal
the firm produces at MR=MC and the price charges from demand curve where MR curve is below the demand curve because the demand curve is downward sloping.

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