Economics 1A

COECA1-22

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 What will be covered
in today’s lesson?

Week 6 Lesson 2 Monopolistic

competition
Quiz

1. An industry with a large number of firms, product

differentiation, and free entry and exit is called
a. Oligopoly
b. Perfect competition
c. Monopoly
d. Monopolistic competition
Quiz

2. In monopolistic competition, each firm supplies a

small part of the market. This occurs because
a. There are barriers to entry.
b. Firms produce differentiated products.
c. There are no barriers to entry.
d. There are a large number of firms.
Quiz

3. In monopolistic competition, the products of different

sellers are assumed to be
a. Similar but slightly different
b. Identical substitute products
c. Either identical or differentiated
d. Unique without any close or perfect substitute
Quiz

4. In an industry with a large number of firms,

a. Collusion is impossible.
b. One firm will dominate the market.
c. Each firm will produce a large quantity, relative to
market demand.
d. Competition is eliminated.
Quiz

5. Which of the following is an example of a

monopolistically competitive industry
a. Wheat farming
b. Colleges and universities
c. The local electricity producer
d. The domestic automobile producing industry
Quiz

6. All of the following are examples of product

differentiation in monopolistic competition EXCEPT
a. New and improved packaging
b. Lower price
c. Acceptance of more credit than competition
d. Location of the retail store
Quiz

7. A differentiated product has

a. Many perfect substitute
b. Close but not perfect substitute
c. No close substitute
d. No substitute of any kind
Quiz

8. If a monopolistically competitive seller can convince

buyers that it’s product is of better quality and value than
products sold by rival firms,
a. A demand increases
b. The firm gains more control over its price
c. Demand becomes more inelastic
d. All of the above occur
Quiz

9. Marketing consist of what?

a. Selling at a lower price than rivals sell for
b. Producing more outputs to lower average costs
c. Advertising and packaging
d. None of the above answers are correct
Quiz

10. Firms use marketing to

a. Influence a consumer’s buying decision
b. Convince customers that their product is worth its price
c. Persuade buyers that their product is superior to others
d. All of the above answers are correct
Quiz: Answers
1. D

2. D

3. A

4. A

5. B

6. B

7. B

8. D

9. C

10.D
 Activity 2

Use a graphs to indicate a firms

demand curve in a
monopolistically competitive
market
Activity 2: Answer
Activity 3: Look at the following
graph and answer the questions
Reproduce this graph on a piece of paper and
show the following (answers are to be sent in the
chat box)

1. Indicate a point of profit maximisation.

2. Indicate on the graph what quantity must the
monopolistic competitive firm start to produce at.
3. Indicate the price that a monopolistic
competitive firm can charge.
4. Indicate the economic profit of a monopolistic
competitive firm
Activity 3: Answer
What Happens Next?

Prepare for
next week’s
content on
Oligopoly