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- Monopoly & Competitioneconomics-mcqs › monopoly-competition
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Why does the term "monopoly" appear in the name of the market structure known as "monopolistic competition"?
Multiple choice question for Monopoly & Competition. Select an option, then review the explanation below.
Explanation
The term "monopoly" in monopolistic competition highlights that firms encounter a downward-sloping demand curve for their differentiated goods, which is a characteristic shared with monopolists. This means each firm has some control over its pricing because their product is not a perfect substitute. Other options incorrectly describe pricing behavior, market entry conditions, or scale of production.
More Monopoly & Competition MCQs
Practice related questions from the same subject.
- 1.Which of the following is NOT commonly cited as a criticism of advertising and brand names?
- 2.Which type of company is most likely to allocate a significant portion of its sales revenue to advertising?
- 3.Why does the term "competition" apply to the market structure known as "monopolistic competition"?
- 4.In monopolistic competition, inefficiency arises because the price exceeds marginal cost, leading to some valuable units not being produced due to what reason?
- 5.Among the following types of businesses, which one is least motivated to invest in advertising?