Week 7 - Monopolistic Competition

Question 1

Do perfectly competitive or monopolistic competitive firms have free entry and exit in the market?

Answer 1

Both

Question 2

Do perfectly competitive or monopolistic competitive firms have a large number of buyers and sellers?

Answer 2

Both

Question 3

Do perfectly competitive or monopolistic competitive firms sell identical products?

Answer 3

Perfectly competitive firms sell identical products, whereas monopolistic competitive firms sell differentiated products.

Question 4

Do perfectly competitive or monopolistic competitive firms have control over the price?

Answer 4

Perfectly competitive firms are a price taker, whereas monopolistic competitive firms have some control over the price.

Question 5

Do perfectly competitive or monopolistic competitive firms have an elastic demand curve?

Answer 5

Perfectly competitive firms have a perfectly elastic demand curve, whereas monopolistic competitive firms have a relatively elastic demand curve.

Question 6

Do perfectly competitive or monopolistic competitive firms have profit in the long run?

Answer 6

Both have zero profit in the long run.

Question 7

What is a mark-up?

Answer 7

The amount added to a product or service to determine the selling price.

Question 8

What is DWL?

Answer 8

Dead weight loss