Question 1

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Accepted Answer

A) True 
 B)False

Question 2

In monopolistically competitive markets, economic losses

Accepted Answer

A)  suggest that some existing firms will exit the market.
B)  suggest that new firms will enter the market.
C)  are minimized through government-imposed barriers to entry.
D)  are never possible.

Question 3

On a vacation to China, you find yourself eating every meal at the local Burger King rather than buying a meal from one of the street vendors. Your traveling companion claims that you are irrational, since you never eat Burger King hamburgers when you are home, and Burger King's hamburgers cost more than the meals prepared and sold by China's street vendors. An economist would most likely explain your behavior by suggesting that

Accepted Answer

A)  your behavior is rational, but your friend's behavior is clearly irrational.
B)  you are clearly irrational, but your friend's behavior is rational.
C)  the Burger King brand name suggests consistent quality.
D)  the advertising by Burger King in China is more persuasive than the advertising by Burger King in your home town.

Question 4

Figure 16-2. The figure is drawn for a monopolistically competitive firm.

-Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Accepted Answer

A)  Firms will exit this industry.
B)  Firms will enter this industry.
C)  This firm will continue to earn positive economic profits.
D)  This firm will incur losses.

Question 5

Defenders of advertising

Accepted Answer

A)  concede that advertising increases firms' market power.
B)  concede that advertising makes entry by new firms more difficult.
C)  contend that firms use advertising to provide useful information to consumers.
D)  All of the above are correct.

Question 6

The higher the concentration ratio, the

Accepted Answer

A)  more control an individual firm has to set prices.
B)  more competitive the industry.
C)  less competitive the industry.
D)  Both a and c are correct.

Question 7

​In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

Accepted Answer

A) True 
 B)False

Question 8

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. 
-Refer to Table 16-3. What is the concentration ratio for Industry B?

Accepted Answer

A)  approximately 46%
B)  approximately 54%
C)  approximately 57%
D)  approximately 61%

Question 9

Figure 16-2. The figure is drawn for a monopolistically competitive firm.

-Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Accepted Answer

A)  P=$24, profit=$0
B)  P=$36, profit=$144
C)  P=$36, profit=$48
D)  P=$36, profit=$0

Question 10

Examples of monopolistically competitive markets include the markets for

Accepted Answer

A)  restaurants and furniture.
B)  wheat and corn.
C)  postage stamps and wooden pencils.
D)  All of the above are correct.

Question 11

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Accepted Answer

A)  less than 100 units of output.
B)  100 units of output.
C)  between 100 and 133.33 units of output.
D)  more than 133.33 units of output.

Question 12

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Accepted Answer

A) True 
 B)False

Question 13

Economists are unanimous in their belief that advertising is socially inefficient.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 16-8
Burger Bonanza, a major national burger chain, recently decided to spend $4 million on an advertising campaign featuring a world famous actor to promote its new Bomber Burger.
-Refer to Scenario 16-8. What can consumers conclude from Burger Bonanza's willingness to spend $4 million on an advertising campaign?

Accepted Answer

high quali...

Question 15

Critics of advertising argue that advertising

Accepted Answer

A)  creates demand for products that people otherwise do not want or need.
B)  lowers barriers to entry into an industry because new firms can more easily establish themselves as competitors.
C)  increases competition by providing information about prices.
D)  encourages monopolization of markets by raising entry barriers.

Question 16

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

Accepted Answer

A) True 
 B)False

Question 17

Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Accepted Answer

A)  the number of firms in the market decreases.
B)  each existing firm experiences a decrease in demand for its product.
C)  each existing firm experiences a rightward shift of its marginal revenue curve.
D)  each existing firm experiences an upward shift in its average total cost curve.

Question 19

Scenario 16-3
Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) 
-Refer to Scenario 16-3. What is the maximum amount of profit that Peter can earn per day?

Accepted Answer

The answer of Scenario 16-3
Peter operates an ice cream shop...

Question 20

Under which of the following market structures would consumers likely pay the highest price for a product?

Accepted Answer

A)  perfect competition
B)  monopolistic competition
C)  oligopoly
D)  monopoly

Exam 16: Monopolistic Competition

Under which of the following market structures would consumers likely pay the highest price for a product?

Correct Answer
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Correct Answer
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Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. What is the concentration ratio for Industry B?

Correct Answer
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Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Correct Answer
verified

In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

Correct Answer
verified

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Correct Answer
verified

The higher the concentration ratio, the

Correct Answer
verified

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

Correct Answer
verified

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Correct Answer
verified

Economists are unanimous in their belief that advertising is socially inefficient.

Correct Answer
verified

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Correct Answer
verified

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Correct Answer
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Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Correct Answer
verified

In monopolistically competitive markets, economic losses

Correct Answer
verified

Critics of advertising argue that advertising

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
high quali...
View Answer

Defenders of advertising

Correct Answer
verified

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Correct Answer
verified

Examples of monopolistically competitive markets include the markets for

Correct Answer
verified

Exam 16: Monopolistic Competition

Under which of the following market structures would consumers likely pay the highest price for a product?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. What is the concentration ratio for Industry B?

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Correct AnswerverifiedShow Answer

​In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

Correct AnswerverifiedShow Answer

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Correct AnswerverifiedShow Answer

The higher the concentration ratio, the

Correct AnswerverifiedShow Answer

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

Correct AnswerverifiedShow Answer

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Correct AnswerverifiedShow Answer

Economists are unanimous in their belief that advertising is socially inefficient.

Correct AnswerverifiedShow Answer

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Correct AnswerverifiedShow Answer

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Correct AnswerverifiedShow Answer

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Correct AnswerverifiedShow Answer

In monopolistically competitive markets, economic losses

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverifiedhigh quali...View AnswerShow Answer

Defenders of advertising

Correct AnswerverifiedShow Answer

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Correct AnswerverifiedShow Answer

Examples of monopolistically competitive markets include the markets for

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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high quali...
View Answer

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Correct Answer
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Correct Answer
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