1. An important similarity between a monopolistically competitive firm and a pure monopolist is that both:?

A. realize an economic profit in the long run.
B. achieve allocative efficiency.
C. face demand curves which are less than perfectly elastic.
D. achieve productive efficiency.

4. An industry producing a differentiated product whose four-firm concentration ratio is 18 percent is an example of:
A. monopolistic competition
B. oligopoly
C. pure monopoly
D. pure competition

Answer:
1. Not A - monopolistically competitive firm earns no profit. Not B. Not D. - a trivial similarity, not an important one. This leaves C., which is correct. (A monopolisitcally competitive firm differentiates its product and therefore introduces imperfectly elastic demand).

2. Again, the clue is "differentiated product", plus the fact that the top four firms garner less than one-fifth of the market. This looks like A. - monopolistic competition.
Have the market covered
I think I know the answer to these questions. For question one, it is answer c. A monopoly has near-complete control over a product for which there is no easy substitute and thus the consumer is willing to pay higher prices-the demand curve would not be perfectly elastic as the monopoly could overcharge without demand falling to zero.

For the next question, I think it is answer B by process of elimination. It is not a monopoly of any kind as there are four firms, and it can not be pure competition as in pure competition no firm can have a market concentration greater than 1% from what I can remember from microecon class. Better check around for other answers though to be sure.
1-D by process of elimination because in both there is only normal profit in the long run (so no economic profit) and monopolistic competition tends to be allocatively and productively inefficient relative to perfect competition as it may overuse resources in order to achieve the variety it offers which is why it has been accused of having excess capacity. for more on this topic try reading
http://www.econessays.com/mon.htm...

4-A because perfect competition doesnt have product differentiation and in order for a firm to be a monopoly or an oligopoly its four firm concentration ratio must be at least higher than 50% because otherwise it means other firms also have a relatively large market share or at least are close to having a market share similar to the top first four firms.

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