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