1.Which of the following areways that a firm could attempt to demonstrate product differentiation?

Select all that apply:

a. through advertisement about its product's notable features

b. pricing the product differently for different customers

c. offering a warranty that is more generous than most competitors

d. running a sale on itsproduct

2.In a market characterized bymonopolisticcompetition, how will new firms choose to engage this market?

a. Firms will enter the market to avoid losing economic profits that occur in perfect competition.

b. As long as thefirms in the market are earning positive economic profits, new competitors will want to enter the market to earn those profits too.

c. As long as thefirms in the market are earning positive economic profits, entry into the market is not possible.

d. As long as thefirms in the market are losing economic profits, new competitors will continue to enter the market to try to earn what other firms lose.

3.In the framework of monopolistic competition,which of the following isnota possible outcome for a firm that runs a successful advertising campaign?

a. allocative efficiency

b. the ability of the firm to charge a higher price

c. the ability of the firm to sell a greater quantity

d. an increase in profits for the firm

4.Which of the following is not a true statement about monpolistic competitors ormonopolistically competitivemarkets?

a. A monopolistically competitive firm attracts less competition than a firm that is considered amonopoly.

b. As long as a monopolistic competitive firmis earning positive economic profits, new competitors will continue to enter the market,

c. Even though amonopolistically competitive firm may earn positive economic profits in the short term, the process of new entry will drive down economic profits to zero in the long run.

d. In an environment with monopolistic competition, economic losses induce firms to leave the industry.

5.It is a basic condition for a firm that it exists only as long as it makes a profit.This is particularly true in a monopolistic competitive environment, where firms will exit the market up to the point where there are no more losses in the market.

a. True

b. False

6.The existence of ______________ in a monopolistically competitive industry will induce entry in the _____________run. As new firms enter, the demand curve and marginal revenue curve facing a typical firm will shift to the ________________.

a. economic loss, long, left

b. economic profits, short, right

c. economic loss, long, right

d. economic profits, long, left

7.What is the difference between the price elasticity of demand for a monopolist and the price elasticity of demand for a monopolistic competitor?

a. Monopolists face a higher elasticity of demand thanmonopolistic competitors.

b. Monopolists face a lower elasticity of demand thanmonopolistic competitors.

c. Both markets face perfectly elastic demand.

d. The elasticity of demand for monopolists andmonopolistic competitors depends on the industry not on the market type.

8.Which of the following industries is most likely not going to spend time, money and effort to differentiate its product?

a. higher education

b. snack chips

c. electricity

d. clothing

9.Of the following industries, which two would be most likely to be categorized as oligopolies?

a. smartphones

b. personal computers (including laptops and tablets)

c. corn

d. higher education

10.Oligopolistic markets generally consist of a greater number of firms than monopolistically competitive markets.

a. True

b. False

11.Which of the followingbest characterizesproduct differentiation?

a. longer lines, less convenience, and less variety

b. better quality goods, more variety, and free shipping

c. unfriendly service, expensive shipping costs, and lack of product quality

d. slow service anddisappointing shopping experience