ECON College American Economics Monopolistic Competition Practice Quiz

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Question 1

Which market structure is shown in the graph above and which letter corresponds to the profit-maximizing level of output?

Group of answer choicesPerfect Competition, E

Monopolistic Competition, C

Perfect Competion, C

Monopoly, E

Flag question: Question 2Question 2

Because of free entry and exit, companies in perfectly competitive markets

Group of answer choicescan earn positive or negative economic profits, but in the long run, firms have negative economic profits.

can earn positive economic profits, but in the long run, firms have zero economic profits.

can earn positive or negative economic profits, but in the long run, firms have zero economic profits.

can earn negative economic profits, but in the long run, firms have zero economic profits.

Flag question: Question 3Question 3

A perfectly competitive firm would be making negative profits if the price is

Group of answer choicesanywhere below $5.

above $5.

below $4.

below $5 but above $4.

Flag question: Question 4Question 4

A price taker

Group of answer choiceswill always make economic profits.

has some control over the price it charges.

is a characteristic held by a monopolistically competitive firm.

must set the price equal to the price charged by other sellers.

Flag question: Question 5Question 5

This firm

Group of answer choicescannot make a profit.

is in a competitive market.

is not a monopolist because its MR