Lesson 4.1.5.4
4.1.5.4 Monopolistic competition Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.5.4, Monopolistic competition: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
-
Which feature distinguishes monopolistic competition from perfect competition?
- Product differentiation
- Single seller
- Homogeneous products
- High entry barriers
-
At what output level does a monopolistically competitive firm maximise profit?
- P equals MC
- MR equals MC
- AR equals ATC
- MR equals zero
-
What type of profit does a monopolistically competitive firm earn in the long run?
- Supernormal profit
- Subnormal profit
- Economic loss
- Normal profit
-
Which strategy is a form of non-price competition in monopolistic competition?
- Price cutting
- Collusive pricing
- Discounting
- Advertising
-
Why does a firm in monopolistic competition face a downward-sloping demand curve?
- Product differentiation
- Identical products
- Perfect information
- Price taking behaviour
-
In long-run equilibrium under monopolistic competition, market price equals:
- Average total cost
- Minimum average cost
- Marginal cost
- Marginal revenue
-
A firm sells 500 units at £14 each with average total cost of £12. Calculate total profit.
- £1,000
- £7,000
- £6,000
- £2
-
What shape is the marginal revenue curve relative to the demand curve in monopolistic competition?
- Horizontal and equal
- Vertical and parallel
- Steeper and below
- Flatter and above
-
What is created in the long run due to excess capacity in monopolistic competition?
- Productive efficiency
- Allocative efficiency
- Spare capacity
- Economies of scale
-
What is the long-run economic profit level for a firm in monopolistic competition?
- Normal profit
- Subnormal profit
- Supernormal profit
- Zero revenue
-
How does strong brand loyalty affect a firm's price elasticity of demand?
- Decreases elasticity
- Has no effect
- Increases elasticity
- Makes it infinite
-
Which type of efficiency is achieved in monopolistic competition?
- Both efficiencies
- Neither efficiency
- Productive efficiency only
- Allocative efficiency only
-
What makes a monopolistic competitor's demand curve more price elastic?
- Higher brand loyalty
- More close substitutes
- Greater market share
- Fewer close substitutes
-
What feature of monopolistic competition ensures firms earn only normal profit in long-run equilibrium?
- Homogeneous products
- Price collusion
- Low entry barriers
- High entry barriers
-
A café chain differentiating itself through decor, location and menu is engaging in what?
- Price discrimination
- Non-price competition
- Collusive pricing
- Predatory pricing
-
How does the entry of a close rival product affect the original firm's demand curve?
- Becomes vertical
- Shifts left
- Shifts right
- Remains unchanged
-
Which strategy is an example of non-price competition?
- Discounting
- Price matching
- Branding
- Price cutting
-
Why is productive efficiency not achieved in monopolistic competition long-run equilibrium?
- Excess capacity exists
- Output below minimum AC
- Price exceeds marginal cost
- Supernormal profits earned
-
Which industry best exemplifies a monopolistically competitive market structure?
- Local restaurants
- Wheat farming
- Water supply
- Aircraft manufacturing
-
Compared to a monopoly, why is demand for a monopolistic competitor's product more price elastic?
- More close substitutes
- High entry barriers
- Identical products
- No close substitutes
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