Question 1

In the long run, price is equal to _________________ cost for the monopolistic competitor.

Accepted Answer

The answer of In the long run, price is equal...

Question 2

Each of the following is an example of price discrimination except

Accepted Answer

A)  senior citizen discounts at restaurants.
B)  lower-priced movie tickets at "rush hour" to attract customers at dinner time.
C)  high-priced tickets just behind the bench of the NBA championship team.
D)  student rates for subscriptions to Business Week.

Question 3

A monopolistically competitive industry has

Accepted Answer

A)  a differentiated product and barriers to exit and entry.
B)  a differentiated product and ease of exit and entry.
C)  identical products and barriers to exit and entry.
D)  identical products and ease of exit and entry. B

Question 4

Under monopolistic competition there

Accepted Answer

A)  is product standardization.
B)  is perfect price discrimination.
C)  are too many firms producing over-differentiated products.
D)  are many firms producing differentiated goods and services.

Question 5

Which statement is true?

Accepted Answer

A)  The monopolistic competitor always makes a profit in the short run.
B)  The monopolistic competitor operates at peak efficiency.
C)  Product differentiation takes place in the minds of the buyers.
D)  None of these statements are true.

Question 6

Product differentiation is _____ based on real physical differences among products.

Accepted Answer

A)  always
B)  sometimes
C)  never

Question 7

__________________ is the crucial characteristic of monopolistic competition.

Accepted Answer

A)  Product differentiation
B)  Price discrimination
C)  Economies of scale
D)  Identical products

Question 8

______% of all American business firms are monopolistic competitors.

Accepted Answer

The answer of ______% of all American business firms are...

Question 9

Statement I. The airlines often engage in price discrimination. Statement II. Price discrimination occurs when a seller charges two or more prices for the same good or service.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Question 10

A monopolistic competitor takes a loss only in the _____________.

Accepted Answer

The answer of A monopolistic competitor takes a loss only...

Question 11

The firm that practices price discrimination needs to be able to distinguish _________; the seller also has to be able to prevent the buyers in the lower-priced market from ________ the product to those in the higher-priced market.

Accepted Answer

two or more separate markets; reselling

Question 12

Use the following figure to answer the question :

-This profit-maximizing firm produces a quantity of a little over _______ units.

Accepted Answer

A)  125
B)  110
C)  85
D)  65

Question 13

Use the following figure to answer the question :

-This profit-maximizing (loss-minimizing)  firm produces a quantity of about _______ units.

Accepted Answer

A)  100
B)  80
C)  50
D)  30

Question 14

Use the following figure to answer the question :

-If the firm is maximizing profits (minimizing losses) , this firm charges a price of _____.

Accepted Answer

A)  $10.30
B)  $14.10
C)  $18.40
D)  $25.90

Question 15

In the long run the monopolistic competitor

Accepted Answer

A)  charges the same price but produces a greater output than the perfect competitor.
B)  charges a higher price but produces a smaller output than the perfect competitor.
C)  charges a higher price and produces a higher output than the perfect competitor.
D)  charges a lower price and produces a lower output than the perfect competitor.
E)  charges a lower price but produces a higher output than the perfect competitor. B

Question 16

Statement I: The absence of significant barriers to entry ensures that long run profits will be competed away for the monopolistic competitor. Statement II: Providing better service, ambience, or a convenient location are all forms of price discrimination.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Question 17

Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

Accepted Answer

A)  price equals minimum possible average total cost.
B)  price equals marginal cost.
C)  marginal revenue equals average total cost.
D)  price equals average total cost.

Question 18

Assume a monopolistically competitive firm is producing at an output level at which marginal revenue is $15 and marginal cost is $18. The profit-maximizing firm should

Accepted Answer

A)  raise output.
B)  lower output.
C)  keep output constant.
D)  The firm should take none of these actions.

Question 19

Draw a graph of the monopolistic competitor in the long run in the graph below.

Accepted Answer

The answer of Draw a graph of the monopolistic competitor...

Question 20

If a monopolistically competitive firm is making profits

Accepted Answer

A)  it can be assured of high profits for all time to come.
B)  the entrance of new firms decreases the demand facing the firm, thereby reducing profits.
C)  the entrance of new firms increases the demand facing the firm, thereby reducing profits.
D)  the entrance of new firms increases costs, thereby reducing profits.

Exam 11: Monopolistic Competition

In the long run, price is equal to _________________ cost for the monopolistic competitor.

Correct AnswerverifiedShow Answer

Each of the following is an example of price discrimination except

Correct AnswerverifiedShow Answer

A monopolistically competitive industry has

Correct AnswerverifiedB

Under monopolistic competition there

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

Product differentiation is _____ based on real physical differences among products.

Correct AnswerverifiedShow Answer

__________________ is the crucial characteristic of monopolistic competition.

Correct AnswerverifiedShow Answer

______% of all American business firms are monopolistic competitors.

Correct AnswerverifiedShow Answer

Statement I. The airlines often engage in price discrimination. Statement II. Price discrimination occurs when a seller charges two or more prices for the same good or service.

Correct AnswerverifiedShow Answer

A monopolistic competitor takes a loss only in the _____________.

Correct AnswerverifiedShow Answer

The firm that practices price discrimination needs to be able to distinguish _________; the seller also has to be able to prevent the buyers in the lower-priced market from ________ the product to those in the higher-priced market.

Correct Answerverifiedtwo or more separate markets; reselling

Use the following figure to answer the question : -This profit-maximizing firm produces a quantity of a little over _______ units.

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -This profit-maximizing (loss-minimizing) firm produces a quantity of about _______ units.

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -If the firm is maximizing profits (minimizing losses) , this firm charges a price of _____.

Correct AnswerverifiedShow Answer

In the long run the monopolistic competitor

Correct AnswerverifiedB

Statement I: The absence of significant barriers to entry ensures that long run profits will be competed away for the monopolistic competitor. Statement II: Providing better service, ambience, or a convenient location are all forms of price discrimination.

Correct AnswerverifiedShow Answer

Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

Correct AnswerverifiedShow Answer

Assume a monopolistically competitive firm is producing at an output level at which marginal revenue is $15 and marginal cost is $18. The profit-maximizing firm should

Correct AnswerverifiedShow Answer

Draw a graph of the monopolistic competitor in the long run in the graph below.

Correct AnswerverifiedShow Answer

If a monopolistically competitive firm is making profits

Correct AnswerverifiedShow Answer

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B

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The firm that practices price discrimination needs to be able to distinguish _; the seller also has to be able to prevent the buyers in the lower-priced market from the product to those in the higher-priced market.

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two or more separate markets; reselling

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B

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