Chapter 16

Question 1

monopolistic competition

Answer 1

A market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry into and exit from the industry in the long run.

Question 2

What is the only way monopolistically competitive firms can acquire market power?

Answer 2

product differentiation

Question 3

imperfect substitutes

Answer 3

products of different vendors in monopolistically competitive firms

Question 4

Zero-profit equilibrium

Answer 4

Each firm makes zero profit at its profit-maximizing quantity

happens in the long run

Question 5

excess capacity

Answer 5

Produce less than the output at which average total cost is minimized

Firms in a monopolistically competitive industry

Question 6

brand names

Answer 6

A name owned by a particular firm that distinguishes its products from those of other firms