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- Subject
- Monopoly & Competitioneconomics-mcqs › monopoly-competition
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Explanation
The inefficiency in monopolistic competition occurs because price is set above marginal cost, meaning some units that consumers value more than their cost of production are not made. This gap causes a deadweight loss, representing lost total welfare.
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.Among the following types of businesses, which one is least motivated to invest in advertising?
- 5.In the short term, when a firm's price exceeds its average total cost in a monopolistically competitive market, what is the likely outcome?
- 6.Among the following items, which one is least commonly found in a monopolistic competition market structure?
- 7.Which of the following is not commonly cited by economists as a benefit of advertising?
- 8.Supporters of brand names claim that brand names serve which of the following purposes?
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