Monopolistic Competition Quiz

Each firm's product is at least somewhat different from every other firm's product (correct)

Each firm's product is of higher quality than every other firm's product

Each firm's product is cheaper than every other firm's product

Each firm's product is identical to every other firm's product

It is composed of a single firm selling a unique product in a specific market

It is composed of numerous small firms selling similar products in the same market

It is composed of a few large firms selling similar products in the same market (correct)

It is composed of numerous small firms selling identical products in different markets

Economic profits decrease due to the downward-sloping demand curve

Free entry eliminates economic profits by forcing the firm's demand curve into a position of tangency with its average cost curve (correct)

Economic profits increase due to the downward-sloping demand curve

Economic profits remain constant regardless of market conditions

<p>Carefully watch the major decisions of its rivals and often plans counterstrategies</p> Signup and view all the answers

<p>Ignore interdependence and maximize profits, form a cartel, and engage in price leadership</p> Signup and view all the answers