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CA Foundation Monopolistic Competition — practice questions

Explore 12 free Monopolistic Competition questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Monopolistic Competition questions and exercises with answers

Showing questions 1–12 of 12.

Monopolistic competition has many producers selling products that are:Read the answer and worked solution →Advertising and publicity costs of a monopolistically competitive firm are called:Read the answer and worked solution →In the long run, a monopolistically competitive firm earns:Read the answer and worked solution →In monopolistic competition, what separates one firm's product from another's?Read the answer and worked solution →Cross price elasticity of demand between goods in monopolistic competition is:Read the answer and worked solution →A monopolistically competitive firm is inefficient because it charges a price that:Read the answer and worked solution →Excess capacity under monopolistic competition means firms:Read the answer and worked solution →A monopolistically competitive firm produces where average total cost is:Read the answer and worked solution →Firms in monopolistic competition are:Read the answer and worked solution →In monopolistic competition, there is no conscious rivalry because a firm's actions:Read the answer and worked solution →Higher fixed costs mean a monopolistically competitive market supports:Read the answer and worked solution →Successful advertising may make a firm's perceived demand curve more:Read the answer and worked solution →

Worked practice questions

Monopolistic competition has many producers selling products that are:

  1. Identical
  2. Differentiated
  3. Standardised
  4. State-owned
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Correct answer: B. Differentiated

Branding and quality differences make the products close but not perfect substitutes.

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Advertising and publicity costs of a monopolistically competitive firm are called:

  1. Selling costs
  2. Fixed costs
  3. Sunk costs
  4. Implicit costs
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Correct answer: A. Selling costs

Spending to promote and differentiate the brand is classified as selling cost.

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In the long run, a monopolistically competitive firm earns:

  1. Only normal profit
  2. Supernormal profit
  3. Monopoly rent
  4. A permanent loss
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Correct answer: A. Only normal profit

Free entry erodes profits until each firm only breaks even.

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More Business Economics topics

Price-Output Determination under Different Market FormsTheory of Consumer BehaviourSupplyTheory of ProductionProduction And CostPublic FinanceBusiness CyclesBasic Problems of an Economy and Role of Price Mechanism