1. Which of the following is a necessary characteristic of monopolistic competition?

a) Inelastic demand

b) Free Entry & Exit

c) Homogeneous products

d)The small number of potential buyers

2. Product differentiation in monopolistically competitive markets:

a) can reflect real or perceived differences in the product.

b) cannot be done on the basis of a simple difference in packaging.

c) is not easily identifiable.

d) reduces each firm's ability to control prices.

3. What is true for the markup of price over marginal cost of a profit-maximizing firm in the long run?

a) It is higher in a perfectly competitive market than in a monopoly market

b) It is higher in a monopoly market than in a monopolistically competitive market

c) It is higher in a perfectly competitive market than in an oligopoly

d) It is higher in a monopolistically competitive market than in a competitive market

4. How does the setting change if we analyze an oligopoly instead of monopolistic competition?

a) Firms are now profit maximizing, which is different in the monopolistic competition.

b) Buyers are getting pricing power in an oligopoly, which they did not have in a monopolistic competition.

c) The number of firms competing in an oligopoly tends to be bigger than in a monopolistic competition

d) For oligopolies we abandon the free entrance and exit condition, which we assumed to hold in themonopolistic competition model.

5. If you want to choose a position in the Stackelberg oligopoly model, which one would you prefer to be?

a) Leader

b) Follower

c) This does not matter, both get the same payout

d) The answer depends on the economic strength. Depending on relative size, both positions have advantages and disadvantages

6. Which of the studied oligopolies produces the most surprising results in your opinion? Briefly state what surprised you and whether you are now convinced that it is a correct insight.

7. Describe the concept of monopolistic competition. Use examples to clarify your main points.