Answer to Question #52963 in Microeconomics for Yana

Question

MULTIPLE CHOICE
1. In the long run in a monopolistic competitive industry:
a. economic profits will be positive.
b. price will be driven to zero.
c. the firm will not operate where MR = MC.
d. economic profit will be zero.
e. price will exceed average cost.

2. One key characteristic that is distinctive of an oligopoly market is that:
a. the demand curve facing each firm is downward sloping, with a marginal revenue curve
that lies below the firm's demand curve.
b. the decisions of one seller often influences the price of products, the output, and the profits
of rival firms.
c. there is only one firm that produces a product for which there are no good substitutes.
d. there are many sellers in the market and each is small relative to the total market.

Answer 1

1. d. economic profit will be zero
2. b. the decisions of one seller often influences the price of products, the output, and the profits of rival firms.