QUESTION 1(a)

How do markets with monopolistic competition differ from markets with perfect competition:

	a.	Monopolistically competitive markets have high barriers to entry, but perfectly competitive markets have no barriers to entry
	b.	Monopolistically competitive markets have lower prices than perfectly competitive markets
	c.	Monopolistically competitive markets have lower costs than perfectly competitive markets
	d.	Monopolistically competitive markets sell heterogeneous goods, but perfectly competitive markets sell homogeneous goods
	e.	Monopolistically competitive markets have fewer firms than perfectly competitive markets

1 points

QUESTION 1(b)

Which of the following is the best example of a product with horizontal differentiation:

	a.	soft drinks, in situations where consumers will purchase the type of drink that they prefer
	b.	laptop computers, in situations where consumers with higher incomes will prefer to purchase higher quality brands
	c.	automobiles, in situations where - for a given type of car - consumers will purchase the car with the best possible warranty
	d.	banks, in situations where consumers will tend to put their money in banks with the greatest number of available services
	e.	clothing, in situations where consumers prefer stores that are closer to them

1 points

QUESTION 1(c)

Which of the following qualities makes a firm a price setter:

	a.	when the firm is producing at a point where MR = MC
	b.	when the firm is able to sell goods at a price that is greater than AC
	c.	when the firm's demand curve has a negative slope
	d.	all of the above are correct
	e.	none of the above are correct

1 points

QUESTION 1(d)

Which of the following characteristics of an Oligopoly market differentiates that type of market from all other market types:

	a.	Oligopoly markets have heterogeneous goods
	b.	Oligopoly markets are associated with strategic interaction amongst firms
	c.	Oligopoly markets have high barriers to entry
	d.	Oligopoly markets involve firms that engage in price setting behavior