1. One reason firms in monopolistic competition can charge different prices is that their products are

1 identical 2 similar   3 differentiated 4 guaranteed

2. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition. True or False

3. The Clayton Act brought labor unions under the jurisdiction of the antitrust laws. True or False

4. The greater the product differentiation,

1 the more elastic a firm’s demand curve    2 the less elastic a firm’s demand curve     3the less the price difference between competing firms      4 the closer to perfect competition

5. The demand curve for the output of an individual firm in monopolistic competition is

1more elastic than the market demand curve     2 less elastic than the market demand curve 3 equivalent to the market demand curve    4 perfectly elastic

6.Assume an industry is comprised of three firms—A, B, and C. Firm A controls 50 percent of the market, Firm B controls 30 percent, and Firm C controls 20 percent. What is the value of the Herfindahl Index?

1.   100     2. 200      3.  2600     4. 3800

7. In an oligopoly, the pricing policy of each firm is independent of that of other firms. True or False

8. In monopolistic competition, there is no need for advertising. True or False

9. The individual supply of a monopolist

1. Coincides with the market demand curve     2.is below the market supply curve    3.is below the firm’s average revenue curve     4.coincides with the market supply curve

10. The Clayton Act prohibits price discrimination. True or False