Question 1

In a monopolistically competitive market,the demand curves faced by incumbent firms are unaffected by the entry of new firms into the market.

Accepted Answer

A) True 
 B)False

Question 2

The general term for market structures that fall somewhere between monopoly and perfect competition is

Accepted Answer

A)  incomplete markets.
B)  imperfectly competitive markets.
C)  oligopoly markets.
D)  monopolistically competitive markets.

Question 3

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods.Firm B produces and sells industrial products.Firm C produces and sells an agricultural commodity.Which firm is likely to spend the greatest portion of its total revenue on advertising?

Accepted Answer

A)  firm A
B)  firm B
C)  firm C
D)  There is no reason to believe that any one of the three firms would spend a greater portion of its total revenue on advertising than the other two firms.

Question 4

A monopolistically competitive firm is currently earning a positive economic profit.If other firms enter the market,we would expect that the added competition will cause this firm to adjust its output such that it

Accepted Answer

A)  will operate closer to its efficient scale.
B)  will operate further from its efficient scale.
C)  will no longer be at its efficient scale.
D)  might move either closer to or further from its efficient scale.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  Firms in monopolistic competition and monopoly can earn economic profits in both the short run and the long run.
B)  Both perfectly competitive and monopolistically competitive firms charge a price equal to marginal cost.
C)  Firms in perfect competition,monopolistic competition,and monopoly maximize profits by producing where marginal revenue equals marginal cost.
D)  Both perfectly competitive and monopolistically competitive firms produce the welfare-maximizing level of output.

Question 6

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 7

In the study done by Lee Benham on advertising for eyeglasses,

Accepted Answer

A)  advertising increased the average price.
B)  advertising decreased the average price.
C)  there was no difference in price,but quality was better in the states that didn't allow advertising.
D)  advertising appeared to have no effect whatsoever in the states that permitted advertising.

Question 8

Which of the following statements is correct?

Accepted Answer

A)  In the long run,both perfectly competitive firms and monopolistically competitive firms operate with excess capacity.
B)  A firm operates with excess capacity when,in the long run,its level of output is below the efficient scale.
C)  For any firm,efficient scale is the level of output at which the average-total-cost curve is tangent to the demand curve.
D)  All of the above are correct.

Question 9

It has been said that many of the patrons in McDonald's restaurants in foreign locations are American tourists.A likely reason why many Americans dine at McDonald's while vacationing abroad is

Accepted Answer

A)  they can't get enough McDonald's food when they are at home.
B)  they know and trust the quality associated with the McDonald's brand name.
C)  the food at local restaurants is of inferior quality.
D)  that Americans,by their nature,are not very adventurous.

Question 10

When a monopolistically competitive firm is in a long-run equilibrium,the values of marginal cost,average total cost,and price are all the same.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not an example of Joel Waldfogel's "Tyranny of the Market"?

Accepted Answer

A)  A daily newspaper tailored to appeal to the majority of readers in an area.
B)  Nike creating specialized shoes for American Indians' wider feet.
C)  Pharmaceutical companies spending research and development funds on drugs for common diseases.
D)  Airlines offering daily direct flights from one large city to another.

Question 12

A profit-maximizing firm in a monopolistically competitive market charges a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 13

A monopolistically competitive firm faces the following demand schedule for its product:   Price (dinars)  10987654321 Quantity 2469111315171921\begin{array} { | l | c | c | c | c | c | c | c | c | c | c | } \hline 	ext { Price (dinars)  } & 10 & 9 & 8 & 7 & 6 & 5 & 4 & 3 & 2 & 1 \\hline 	ext { Quantity } & 2 & 4 & 6 & 9 & 11 & 13 & 15 & 17 & 19 & 21 \\hline\end{array} Price (dinars)   Quantity ​102​94​86​79​611​513​415​317​219​121​​  The firm has total fixed costs of $20 and a constant marginal cost of $2 per unit.The firm will maximize profit with

Accepted Answer

A)  6 units of output.
B)  9 units of output.
C)  11 units of output.
D)  13 units of output.

Question 14

A monopolistically competitive firm faces the following demand curve for its product:   Price (dinar)  10987654321 Quantity 2468101214161820\begin{array} { | l | c | c | c | c | c | c | c | c | c | c | } \hline 	ext { Price (dinar)  } & 10 & 9 & 8 & 7 & 6 & 5 & 4 & 3 & 2 & 1 \\hline 	ext { Quantity } & 2 & 4 & 6 & 8 & 10 & 12 & 14 & 16 & 18 & 20 \\hline\end{array} Price (dinar)   Quantity ​102​94​86​78​610​512​414​316​218​120​​  The firm has total fixed costs of 40 dinars and a constant marginal cost of 2 dinars per unit.We can conclude that

Accepted Answer

A)  firms will exit this market.
B)  firms will enter this market.
C)  this market is in long-run equilibrium.
D)  this firm is operating at its efficient scale.

Question 15

When a firm exits a monopolistically competitive market,the individual demand curves faced by all remaining firms in that market will

Accepted Answer

A)  shift in a direction that is unpredictable without further information.
B)  shift to the right.
C)  shift to the left.
D)  remain unchanged.It is the supply curve that will shift.

Question 16

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost?

Accepted Answer

A)  monopoly only
B)  monopoly and monopolistic competition only
C)  monopoly,monopolistic competition,and perfect competition
D)  The answer cannot be determined without knowing whether the market is in the long run or short run.

Question 17

Entry of firms in a monopolistically competitive industry is characterized by two externalities.List them and briefly describe how consumers and existing firms are influenced by them.

Accepted Answer

Business-stealing effect: incumbent firm...

Question 18

Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Competitive firms do not face downward-...

Question 19

A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Accepted Answer

A)  only when the market is a monopoly.
B)  only when the market is a monopoly or monopolistically competitive.
C)  only when the market is monopolistically competitive or perfectly competitive.
D)  when the market is perfectly competitive,monopolistically competitive,or monopolistic.

Question 20

Figure 16-4 
-Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the entry of other firms into a monopolistically competitive industry?

Accepted Answer

A)  panel a
B)  panel b
C)  panel c
D)  panel d

Exam 16: Monopolistic Competition

When a monopolistically competitive firm is in a long-run equilibrium,the values of marginal cost,average total cost,and price are all the same.

Correct Answer
verified

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the entry of other firms into a monopolistically competitive industry?

Correct Answer
verified

It has been said that many of the patrons in McDonald's restaurants in foreign locations are American tourists.A likely reason why many Americans dine at McDonald's while vacationing abroad is

Correct Answer
verified

When a firm exits a monopolistically competitive market,the individual demand curves faced by all remaining firms in that market will

Correct Answer
verified

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost?

Correct Answer
verified

Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Correct Answer
verified
Competitive firms do not face downward-...
View Answer

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods.Firm B produces and sells industrial products.Firm C produces and sells an agricultural commodity.Which firm is likely to spend the greatest portion of its total revenue on advertising?

Correct Answer
verified

Correct Answer
verified

In the study done by Lee Benham on advertising for eyeglasses,

Correct Answer
verified

A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Correct Answer
verified

The general term for market structures that fall somewhere between monopoly and perfect competition is

Correct Answer
verified

Correct Answer
verified

Which of the following is not an example of Joel Waldfogel's "Tyranny of the Market"?

Correct Answer
verified

A profit-maximizing firm in a monopolistically competitive market charges a price equal to marginal cost.

Correct Answer
verified

In a monopolistically competitive market,the demand curves faced by incumbent firms are unaffected by the entry of new firms into the market.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Entry of firms in a monopolistically competitive industry is characterized by two externalities.List them and briefly describe how consumers and existing firms are influenced by them.

Correct Answer
verified
Business-stealing effect: incumbent firm...
View Answer

A monopolistically competitive firm is currently earning a positive economic profit.If other firms enter the market,we would expect that the added competition will cause this firm to adjust its output such that it

Correct Answer
verified

Exam 16: Monopolistic Competition

When a monopolistically competitive firm is in a long-run equilibrium,the values of marginal cost,average total cost,and price are all the same.

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the entry of other firms into a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

It has been said that many of the patrons in McDonald's restaurants in foreign locations are American tourists.A likely reason why many Americans dine at McDonald's while vacationing abroad is

Correct AnswerverifiedShow Answer

When a firm exits a monopolistically competitive market,the individual demand curves faced by all remaining firms in that market will

Correct AnswerverifiedShow Answer

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost?

Correct AnswerverifiedShow Answer

Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Correct Answerverified Competitive firms do not face downward-...View AnswerShow Answer

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods.Firm B produces and sells industrial products.Firm C produces and sells an agricultural commodity.Which firm is likely to spend the greatest portion of its total revenue on advertising?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the study done by Lee Benham on advertising for eyeglasses,

Correct AnswerverifiedShow Answer

A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Correct AnswerverifiedShow Answer

The general term for market structures that fall somewhere between monopoly and perfect competition is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not an example of Joel Waldfogel's "Tyranny of the Market"?

Correct AnswerverifiedShow Answer

A profit-maximizing firm in a monopolistically competitive market charges a price equal to marginal cost.

Correct AnswerverifiedShow Answer

In a monopolistically competitive market,the demand curves faced by incumbent firms are unaffected by the entry of new firms into the market.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Entry of firms in a monopolistically competitive industry is characterized by two externalities.List them and briefly describe how consumers and existing firms are influenced by them.

Correct AnswerverifiedBusiness-stealing effect: incumbent firm...View AnswerShow Answer

A monopolistically competitive firm is currently earning a positive economic profit.If other firms enter the market,we would expect that the added competition will cause this firm to adjust its output such that it

Correct AnswerverifiedShow Answer

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Competitive firms do not face downward-...
View 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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Business-stealing effect: incumbent firm...
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Correct Answer
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