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· Question 22 A monopolist: Can minimize its long-run losses by shutting down its plant Will...

· Question 22

A monopolist:
  1. Can minimize its long-run losses by shutting down its plant
  2. Will always make profit in the short run
  3. Can make losses in the long-run
  4. Long-run profit will be greater than or equal to its short-run profit, for a given demand condition

· Question 23

Demand curve facing a monopolistically competitive firm is:
  1. Highly inelastic and downsloping
  2. Highly elastic and downsloping
  3. Highly elastic and upsloping
  4. Highly inelastic and upslooping

· Question 24

Monopolistic competition is characterized by:
  1. Few dominant firms and low entry barriers
  2. Few dominant firms and substantial entry barriers
  3. A large number of firms and substantial entry barriers
  4. A large number of firm and low entry barriers
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Answer #1

Answer : 22) The answer is option b.

Monopolist always earn super normal profit in short-run. Because monopolist has market power and always charge high price on limited quantity to earn profit. Therefore, option b is correct.

23) The answer is option b.

In monopolistic competition all firms face a downward sloping demand curve. This downward sloping demand curve is very elastic. Therefore, option b is correct.

24) The answer is option d.

In monopolistic competition large number of firms exists in the market. Any firm can enter easily into the market due to low entry barrier. Therefore, option d is correct.

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