,1. Multiple Choice: Which of the following is not a key feature of
monopolistic competition?
a) Many sellers
b) Product differentiation
c) Free entry and exit in the market
d) Price-taking behavior
Answer: d) Price-taking behavior
Rationale: In monopolistic competition, firms have some power
to set prices due to product differentiation, unlike in perfect
competition where firms are price-takers.
2. True/False: In a perfectly competitive market, individual firms
can influence the market price.
Answer: False
Rationale: In perfect competition, the market determines the
price, and individual firms must accept this price as given.
3. Fill-in-the-Blank: The _________ is the additional cost incurred
from producing one more unit of a good.
Answer: Marginal Cost
, Rationale: Marginal cost is a key concept in economics that
measures the cost of producing an additional unit of output.
4. Multiple Response: Select all that apply. Which of the following
are assumptions of the Classical model of economics?
a) Flexible prices and wages
b) Full employment
c) Fixed money supply
d) Government intervention is necessary
Answers: a) Flexible prices and wages, b) Full employment, c)
Fixed money supply
Rationale: The Classical model assumes that the economy is self-
regulating and that markets clear through flexible prices and wages,
with full employment and a fixed money supply. It does not
advocate for government intervention.
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