1. A monopolistically competitive market structure is characterized by all the following except:

a) all firms sell a differentiated product

b) all firms are price takers

c) no barriers to entry of new firms

d) many, small independently acting sellers

2. Compared to a competitive firm, a monopolistically competitive firm:

a) faces a more inelastic demand curve

b) is less likely to advertise its product

c) faces a more elastic demand curve

d) can earn positive profits in the long run

3. Suppose several firms in a purely competitive industry begin to experiment slightly with their product design, which allows them to modestly increase their prices. The industry would now more closely resemble:

a) pure monopoly

b) oligopoly

c) monopolistic competition

d) competitive monopoly

4. Consider the following information for a typical firm in a particular monopolistically competitive industry. Price = $50, MR = MC = $40, ATC = $45. From the information given, we can conclude that:

a) this firm's demand curve will shift to the right as some firms exit the industry

b) this firm's demand curve will shift to the left as some firms enter the industry

c) this firm's demand curve will shift to the right as some firms enter the industry

d) the industry is in long-run equilibrium

5. In which market structure(s) will price exceed marginal revenue?

a) Differentiated oligopoly and monopoly only

b) Standardized oligopoly and pure competition only

c) Monopolistic competition and monopoly only

d) Monopolistic competition, oligopoly, and monopoly

6. Use the following diagram to answer the next question.

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