CLEP Microeconomics chapter practice4 questions

19 Comparing Market Structures

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

Which description best fits monopolistic competition?

Monopolistic competition combines many sellers and easy entry with differentiated products.
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E. Many sellers offering differentiated products

Monopolistic competition combines many sellers and easy entry with differentiated products.

Question 2

Question 2 of 4

A firm faces a horizontal demand curve at the market price. The firm is most likely

A horizontal firm demand curve means the seller can sell at market price but cannot profitably charge more, the price-taking result.
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C. a perfectly competitive seller

A horizontal firm demand curve means the seller can sell at market price but cannot profitably charge more, the price-taking result.

Question 3

Question 3 of 4

Which feature most clearly distinguishes oligopoly from monopolistic competition?

With only a few major firms, each firm must anticipate rivals' responses. Product differentiation and advertising can occur in both structures.
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D. Strategic interdependence

With only a few major firms, each firm must anticipate rivals' responses. Product differentiation and advertising can occur in both structures.

Question 4

Question 4 of 4

A market served by one seller protected by a legal barrier is best described as

A single protected seller is a monopoly; the barrier prevents potential rivals from eroding its market power.
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B. monopoly

A single protected seller is a monopoly; the barrier prevents potential rivals from eroding its market power.

Quiz complete