Monopolistic competition

Question 1

To what extent are hairdressers a good example of firms operating under monopolistic competition?

Question 2

Which of the following markets/industries are closest to the economists d definition of monopolistic competition - you may select more than one:

1. Airlines

2. Petrol retailers

3. Plumbers

4. Independent electrical retailers

5. A coffee grower in Brazil

6. An estate agents

7. Electricity generation

8. Retail banks

Question 3

Draw separate diagrams to show a firm under monopolistic competition making supernormal profits in the short run and normal profits in the long run.

Question 4

Evaluate monopolistic competition as a market structure.

Question 5 - Multiple choice

A firm in long run equilibrium under monopolistic competition will exhibit:

1. Allocative but not productive efficiency

2. Productive but not allocative efficiency

3. Neither productive nor allocative efficiency

4. Super-normal profits

5. Both allocative and productive efficiency