C) because of barriers to entry into the industry. D) because of barriers to exit from the industry. Answer: B 11) In a monopolistically competitive industry, A) firms are large relative to the total market. B) firms are small relative to the total market. C) firms can be either large or small relative to the total market. D) there is only one firm. Answer: B 12) Monopolistically competitive firms use a(n) ________ strategy to achieve market power. A) product differentiation B) dominant C) maximin D) opportunistic behavior Answer: A 2) In order to achieve market power, monopolistically competitive firms use ________. A) their size B) product differentiation C) strategic behavior D) predatory pricing Answer: B 3) In well-functioning markets, all of the following reflect the degree of product variety EXCEPT: A) differences in consumers' tastes. B) cost economies from standardization. C) gains from network externalities. D) gains from coordination. Answer: C 4) Product differentiation that makes the product better for some consumers and worse for others is A) always welfare decreasing. B) vertical differentiation. C) horizontal differentiation. D) never undertaken by firms. Answer: C 6) Product differentiation can be used by firms to do all of the following EXCEPT:
C) because of barriers to entry into the industry. D) because of barriers to exit from the industry. Answer: B 11) In a monopolistically competitive industry, A) firms are large relative to the total market. B) firms are small relative to the total market. C) firms can be either large or small relative to the total market. D) there is only one firm. Answer: B 12) Monopolistically competitive firms use a(n) ________ strategy to achieve market power. A) product differentiation B) dominant C) maximin D) opportunistic behavior Answer: A 2) In order to achieve market power, monopolistically competitive firms use ________. A) their size B) product differentiation C) strategic behavior D) predatory pricing Answer: B 3) In well-functioning markets, all of the following reflect the degree of product variety EXCEPT: A) differences in consumers' tastes. B) cost economies from standardization. C) gains from network externalities. D) gains from coordination. Answer: C 4) Product differentiation that makes the product better for some consumers and worse for others is A) always welfare decreasing. B) vertical differentiation. C) horizontal differentiation. D) never undertaken by firms. Answer: C 6) Product differentiation can be used by firms to do all of the following EXCEPT:
ch15_monopolistic-competition.docx