Which of the following is NOT a feature of a monopolistically competitive market?
Correct answer B. Long run economic profits
Topic / 15 questions
Monopoly & Competition MCQs
Monopoly & Competition MCQs cover market structures between perfect competition and pure monopoly, especially monopolistic competition, product differentiation, advertising and brand names. They help economics students, CSS candidates and lecturer test takers. Every question shows its correct answer instantly, so you can check how firms behave in each market type.
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
Which statement correctly compares monopolistic competition with monopoly?
Correct answer D. The monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run
A monopolistically competitive firm chooses the quantity at which marginal cost equals what, and how does it then set its price?
Correct answer B. Marginal revenue and then use the demand curve to determine the price consistent with this quantity
Advertisement
In terms of scale of production and pricing, how do monopolistically competitive firms behave?
Correct answer B. With excess capacity and charge a price above marginal cost
When firms enter a monopolistically competitive market and the business-stealing externality outweighs the product-variety externality, what follows?
Correct answer B. There are too many firms in the market and market efficiency could be increased if firms exited the market
In the term “monopolistic competition”, what does the word “monopoly” refer to?
Correct answer C. A monopolistically competitive firm faces a downward-sloping demand curve for its differentiated product, and so does a monopolist
What do defenders of brand names argue?
Correct answer C. All of these answers
Which of the following is NOT an argument economists make in favour of advertising?
Correct answer A. Advertising provides a creative outlet for artists and writers
Which of these products is least likely to be sold in a monopolistically competitive market?
Correct answer C. Cotton
Advertisement
In the short run, if price is above average total cost in a monopolistically competitive market, what happens?
Correct answer C. Profits and firms enter the market
Which of these firms has the least incentive to advertise?
Correct answer D. A wholesaler of crude oil
What is one source of inefficiency in monopolistic competition?
Correct answer D. Since price is above marginal cost, some units that buyers value in excess of their cost of production are not produced, causing a deadweight loss
In the term “monopolistic competition”, what does the word “competition” refer to?
Correct answer C. There are many sellers in a monopolistically competitive market and there is free entry and exit, just like a competitive market
Which of these firms is most likely to spend a large share of its revenue on advertising?
Correct answer B. The producer of a highly differentiated consumer product
Which of the following is NOT presented as a criticism of advertising and brand names?
Correct answer B. Advertising increases competition, which causes unnecessary bankruptcies and layoffs
Advertisement
About Monopoly & Competition MCQs
Questions in this set compare monopolistically competitive firms with monopolies and perfectly competitive firms. You will find items on how such firms set price above marginal cost, why they operate with excess capacity in the long run, and the business-stealing and product-variety externalities that follow when new firms enter. Other questions cover the debate over advertising and brand names: critics say they manipulate tastes and reduce competition, while defenders argue they signal quality and give firms an incentive to maintain it. These topics are common in microeconomics papers.
Exams that include Monopoly & Competition MCQs
Pakistan
- CSS
- PMS
- PPSC Lecturer tests
- FPSC
India
- UGC NET
- UPSC CSE
- State PSC exams
Bangladesh
- BCS
- University admission tests (DU, RU, JU)
Frequently asked questions
What is monopolistic competition?
Monopolistic competition is a market with many firms selling similar but differentiated products and free entry and exit. Each firm has some control over its price because its product is slightly different. Restaurants, clothing brands and hair salons are common examples.
Why do monopolistically competitive firms have excess capacity?
In long-run equilibrium, a monopolistically competitive firm produces where its downward-sloping demand curve touches its average total cost curve. This point lies to the left of minimum average total cost, so the firm produces less than the efficient scale and has excess capacity.
How many Monopoly and Competition MCQs are on MCQs360?
MCQs360 has 15 Monopoly and Competition MCQs, free to practise with no sign-up. Every question shows its answer instantly, helping you revise market structures and the advertising debate before an economics paper. Comparing each answer with the perfect competition case is a helpful habit.
Last reviewed October 2026