Question 1

On a vacation to Cancun,Mexico,you find yourself eating every meal at the local McDonald's rather than having a hamburger from one of the street vendors.Your traveling companion claims that you are irrational,since you never eat McDonald's hamburgers when you are home,and McDonald's hamburgers cost more than those prepared and sold by Cancun'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 McDonald's brand name suggests consistent quality.
D)   the advertising by McDonald's in Cancun is more persuasive than the advertising by McDonald's in your home town.E) A) and D)
F) B) and C)

Question 2

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

Accepted Answer

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

Question 3

In monopolistically competitive markets,positive economic profits

Accepted Answer

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

Question 4

A firm has the following cost structure:

If this firm is in a typical perfectly competitive market,in the long run it will likely produce

Accepted Answer

A)   4 or fewer units of output.
B)   5 units of output.
C)   more than 5 units of output.
D)   None of the above are necessarily correct because there is not enough information to tell.E) A) and C)
F) B) and C)

Question 5

An oligopoly

Accepted Answer

A)   has a concentration ratio of less than 50 percent.
B)   is a price taker.
C)   is a type of imperfectly competitive market.
D)   has many firms rather than just one firm or a few firms.E) A) and B)
F) B) and C)

Question 6

Figure 16-2
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-2.How much output will the monopolistically competitive firm produce in this situation?

Accepted Answer

A)   20 units
B)   25 units
C)   40 units
D)   80 unitsE) All of the above
F) A) and B)

Question 7

Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.
 
-Refer to Table 16-5.If the government forced Traci's to produce at the efficient scale of output,what is the maximum profit Traci's could earn?

Accepted Answer

A)   $77
B)   $80
C)   $84
D)   $96E) A) and B)
F) All of the above

Question 8

Table 16-3
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-3.How much profit will this firm earn when it chooses its output to maximize profit?

Accepted Answer

A)   a $4 loss
B)   a $2 loss
C)   a $6 profit
D)   a $16 profitE) B) and D)
F) C) and D)

Question 9

List five goods that are likely sold in a monopolistically competitive market.

Accepted Answer

Books,CDs,movies,com...

Question 10

Since a firm in a monopolistically competitive market faces a

Accepted Answer

A)   downward-sloping demand curve,it will always operate with excess capacity.
B)   downward-sloping demand curve,it will always operate at its efficient scale.
C)   perfectly elastic demand curve,it will always operate with excess capacity.
D)   perfectly inelastic demand curve,it will always operate at efficient scale.E) A) and D)
F) C) and D)

Question 11

Which of the following is a characteristic of oligopoly or monopolistic competition,but not perfect competition?

Accepted Answer

A)   advertising and sales promotion
B)   profit maximization according to the MR = MC rule
C)   firms being price takers rather than price makers
D)   horizontal demand and marginal revenue curvesE) B) and C)
F) All of the above

Question 12

Figure 16-6 d in panel (d) ,it would A)  not be maximizing its profit. B)  be minimizing its losses. C)  be losing market share to other firms in the market. D)  be operating at excess capacity." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 16-6.If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d) ,it would

Accepted Answer

A)   not be maximizing its profit.
B)   be minimizing its losses.
C)   be losing market share to other firms in the market.
D)   be operating at excess capacity.E) A) and D)
F) A) and C)

Question 13

Advertisements that appear to convey no information at all

Accepted Answer

A)   are usually associated with "infomercials."
B)   are useless to consumers but valuable to firms.
C)   are useless to firms but valuable to consumers for their entertainment quality alone.
D)   may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise.E) A) and D)
F) B) and C)

Question 14

Which of the following statements is not correct?

Accepted Answer

A)   The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
B)   Monopolistically competitive firms advertise in order to increase the elasticity of the demand curve they face.
C)   Expensive advertising might help consumers if it is a signal that the product is good.
D)   Brand names acquired at great cost might help consumers by assuring quality.E) A) and B)
F) All of the above

Question 15

A monopolistically competitive market is like a competitive market in that

Accepted Answer

A)   both market structures feature easy entry by new firms in the long run.
B)   the main objective of firms in both market structures is something other than profit maximization.
C)   firms in both market structures produce the welfare-maximizing level of output.
D)   firms in both market structures set price above marginal cost.E) None of the above
F) A) and B)

Question 16

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

Accepted Answer

A) True 
 B)False

Question 17

When a monopolistically competitive firm is in long-run equilibrium,

Accepted Answer

A)   price is equal to average total cost.
B)   price is equal to marginal cost.
C)   price is equal to marginal revenue.
D)   the firm operates at its efficient scale.E) A) and D)
F) A) and B)

Question 18

Senator Hubris wants to pass a law that would require all monopolistically competitive firms to operate at their efficient scale.If this law were to pass and be enforced,we would expect that monopolistically competitive firms would

Accepted Answer

A)   see their profits increase.
B)   break even.
C)   lose money.
D)   not really be affected by the law.E) A) and B)
F) B) and C)

Question 19

Kirk consumes Pepsi exclusively.He claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in his mouth.In a blind taste test,Kirk is found to prefer Pepsi to store-brand cola eight out of ten times.The results of Kirk's taste test would refute claims by critics of brand names that

Accepted Answer

A)   consumers are always willing to pay more for brand names.
B)   brand names cause consumers to perceive differences that do not really exist.
C)   consumers with the lowest levels of income are the most likely to be influenced by brand name advertising.
D)   brand names are a form of socially efficient advertising.E) A) and C)
F) A) and B)

Question 20

Figure 16-1.The figure is drawn for a monopolistically competitive firm. 
-Refer to Figure 16-1.In order to maximize profit,the firm will charge a price of

Accepted Answer

A)   $8.
B)   $12.
C)   $16.
D)   $18.E) A) and D)
F) A) and C)

Exam 16: Monopolistic Competition

Which of the following is a characteristic of oligopoly or monopolistic competition,but not perfect competition?

Correct Answer
verified

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.How much output will the monopolistically competitive firm produce in this situation?

Correct Answer
verified

Advertisements that appear to convey no information at all

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

When a monopolistically competitive firm is in long-run equilibrium,

Correct Answer
verified

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A firm has the following cost structure: If this firm is in a typical perfectly competitive market,in the long run it will likely produce

Correct Answer
verified

An oligopoly

Correct Answer
verified

Table 16-3 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-3.How much profit will this firm earn when it chooses its output to maximize profit?

Correct Answer
verified

Figure 16-6 -Refer to Figure 16-6.If a firm in a monopolistically competitive market was producing the level of output depicted as Q_d in panel (d) ,it would

Correct Answer
verified

Senator Hubris wants to pass a law that would require all monopolistically competitive firms to operate at their efficient scale.If this law were to pass and be enforced,we would expect that monopolistically competitive firms would

Correct Answer
verified

Figure 16-1.The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.In order to maximize profit,the firm will charge a price of

Correct Answer
verified

A monopolistically competitive market is like a competitive market in that

Correct Answer
verified

In monopolistically competitive markets,positive economic profits

Correct Answer
verified

List five goods that are likely sold in a monopolistically competitive market.

Correct Answer
verified
Books,CDs,movies,com...
View Answer

Correct Answer
verified

Since a firm in a monopolistically competitive market faces a

Correct Answer
verified

Exam 16: Monopolistic Competition

Which of the following is a characteristic of oligopoly or monopolistic competition,but not perfect competition?

Correct AnswerverifiedShow Answer

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.How much output will the monopolistically competitive firm produce in this situation?

Correct AnswerverifiedShow Answer

Advertisements that appear to convey no information at all

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm is in long-run equilibrium,

Correct AnswerverifiedShow Answer

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm has the following cost structure: If this firm is in a typical perfectly competitive market,in the long run it will likely produce

Correct AnswerverifiedShow Answer

An oligopoly

Correct AnswerverifiedShow Answer

Table 16-3 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-3.How much profit will this firm earn when it chooses its output to maximize profit?

Correct AnswerverifiedShow Answer

Figure 16-6 -Refer to Figure 16-6.If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d) ,it would

Correct AnswerverifiedShow Answer

Senator Hubris wants to pass a law that would require all monopolistically competitive firms to operate at their efficient scale.If this law were to pass and be enforced,we would expect that monopolistically competitive firms would

Correct AnswerverifiedShow Answer

Figure 16-1.The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.In order to maximize profit,the firm will charge a price of

Correct AnswerverifiedShow Answer

A monopolistically competitive market is like a competitive market in that

Correct AnswerverifiedShow Answer

In monopolistically competitive markets,positive economic profits

Correct AnswerverifiedShow Answer

List five goods that are likely sold in a monopolistically competitive market.

Correct AnswerverifiedBooks,CDs,movies,com...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Since a firm in a monopolistically competitive market faces a

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 16-6 -Refer to Figure 16-6.If a firm in a monopolistically competitive market was producing the level of output depicted as Q_d in panel (d) ,it would

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Books,CDs,movies,com...
View Answer

Correct Answer
verified

Correct Answer
verified