In the long run in monopolistic competition, firms earn zero economic profit.
a. True
b. False
QUESTION 2The market demand curve for a public good
a. is the horizontal sum of all individual demand curves
b. is the vertical sum of all individual demand curves.
c. is upward sloping
d. is horizontal
e. does not exist
QUESTION 3A profit-maximizing firm in monopolistic competition should shut down in the short run
a. if marginal revenue is less than price
b. if price is always less than average total cost
c. if price is always less than average fixed cost
d. if price is always less than average variable cost
e. under no circumstances
QUESTION 4A good that is neither rival nor exclusive is called
a. a private good
b. a public good
c. a quasi-private good
d. an external good
e. an open access good
QUESTION 5Which of the following describes the relationship among market price (P), average revenue (AR), and marginal revenue (MR) for a firm in monopolistic competition.
a. P = AR = MR
b. P > AR = MR
c. P = AR > MR
d. P > AR > MR
e. P = AR < MR
QUESTION 6A good that is both rival and exclusive is called
a. a private good
b. a public good
c. a quasi-private good
d. an external good
e. an open access good
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