Question 1

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?

Accepted Answer

A)   at 100 units of output
B)   somewhere between 100 and 133.33 units of output
C)   at 133.33 units of output
D)   at 154.92 units of outputE) B) and D)
F) All of the above

Question 2

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Accepted Answer

Recognizable brand names signal quality ...

Question 3

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) B) and C)
F) A) and D)

Question 4

Figure 16-11 
-Refer to Figure 16-11. If this firm profit-maximizes, how much profit or loss will it earn?

Accepted Answer

The answer of Figure 16-11 
-Refer to Figure 16-11. If...

Question 5

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. When Peter maximizes his profits, what is his total cost per day?

Accepted Answer

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

Question 6

In a long-run equilibrium,

Accepted Answer

A)   excess capacity applies to monopolistically competitive firms but not to competitive firms.
B)   zero economic profit applies to competitive firms but not to monopolistically competitive firms.
C)   markup over marginal cost applies to both monopolistically competitive and competitive firms.
D)   product variety externalities apply to both perfectly competitive firms and monopolistically competitive firms.E) A) and B)
F) B) and C)

Question 7

Which of the following industries has the highest concentration ratio?

Accepted Answer

A)   jeans
B)   fruit
C)   household laundry equipment
D)   restaurantsE) A) and B)
F) A) and C)

Question 8

When existing firms lose customers and profits due to entry of a new competitor, a

Accepted Answer

A)   predatory-pricing externality occurs.
B)   consumption externality occurs.
C)   business-stealing externality occurs.
D)   product-variety externality occurs.E) B) and C)
F) All of the above

Question 9

Which of the following statements is not correct?

Accepted Answer

A)   Critics of advertising argue that firms advertise to manipulate consumers' tastes.
B)   Defenders of advertising argue that advertising provides valuable product information to consumers.
C)   An industry with many brand name products will be more competitive than one with many generic products.
D)   The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product.E) A) and B)
F) B) and C)

Question 10

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Accepted Answer

A)   industrial products.
B)   homogeneous products.
C)   consumer goods for which there are no close substitutes.
D)   highly-differentiated consumer goods.E) A) and C)
F) C) and D)

Question 11

When a monopolistically competitive firm raises its price,

Accepted Answer

A)   quantity demanded falls to zero.
B)   quantity demanded declines but not to zero.
C)   the market supply curve shifts outward.
D)   quantity demanded remains constant.E) C) and D)
F) None of the above

Question 12

Monopolistic competition is an

Accepted Answer

A)   inefficient market structure because there is deadweight loss.
B)   inefficient market structure because price exceeds marginal cost.
C)   efficient market structure because free entry drives long-run profits to zero.
D)   Both a and b are correct.E) B) and D)
F) A) and B)

Question 13

In the short run, a firm in a monopolistically competitive market operates much like a

Accepted Answer

A)   firm in a perfectly competitive market.
B)   firm in an oligopoly.
C)   monopolist.
D)   monopsonist.E) B) and C)
F) All of the above

Question 14

The LookGood BePopular (LGBP)  Clothing Company embarked on a new advertising campaign in which a group of young beautiful people are having fun eating out at a restaurant wearing the company's clothes. Critics of advertising argue that this advertisement

Accepted Answer

A)   causes demand for LGBP Clothing to be less elastic.
B)   is more effective than other forms of advertisement because of its content.
C)   will cause the market to be more competitive.
D)   Both a and b are correct.E) B) and D)
F) None of the above

Question 15

A monopolistically competitive market is like both a competitive market and a monopoly in that

Accepted Answer

A)   all three market structures feature easy entry by new firms in the long run.
B)   firms in all three market structures maximize profit by producing an output level where marginal revenue equals marginal cost.
C)   firms in all three market structures produce the welfare-maximizing level of output.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 16

When a firm operates at efficient scale, it is producing at the minimum point on its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 17

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Accepted Answer

A)   firms would respond by lowering their costs.
B)   firms would require a subsidy to stay in business
C)   new firms that enter the market would operate at efficient scale.
D)   the most efficient firms would not be affected.E) All of the above
F) B) and D)

Question 18

A monopolistically competitive firm faces the following demand curve for its product:  The firm has total fixed costs of $120 and a constant marginal cost of $12 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.E) All of the above
F) A) and D)

Question 19

Which of the following markets impose deadweight losses on society?

Accepted Answer

A)   (i)  and (ii)  only
B)   (ii)  and (iii)  only
C)   (i)  and (iii)  only
D)   (i)  onlyE) A) and B)
F) B) and D)

Question 20

Advertising

Accepted Answer

A)   provides information about products, including prices and seller locations.
B)   has been proven to increase competition and reduce prices compared to markets without advertising.
C)   signals quality to consumers, because advertising is expensive.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Exam 16: Monopolistic Competition

When a monopolistically competitive firm raises its price,

Correct Answer
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In the short run, a firm in a monopolistically competitive market operates much like a

Correct Answer
verified

In a long-run equilibrium,

Correct Answer
verified

A monopolistically competitive market is like both a competitive market and a monopoly in that

Correct Answer
verified

Monopolistic competition is an

Correct Answer
verified

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?

Correct Answer
verified

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

Correct Answer
verified

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Correct Answer
verified
Recognizable brand names signal quality ...
View Answer

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct Answer
verified

Which of the following markets impose deadweight losses on society?

Correct Answer
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Which of the following industries has the highest concentration ratio?

Correct Answer
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Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much profit or loss will it earn?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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When a firm operates at efficient scale, it is producing at the minimum point on its average total cost curve.

Correct Answer
verified

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Correct Answer
verified

When existing firms lose customers and profits due to entry of a new competitor, a

Correct Answer
verified

The LookGood BePopular (LGBP) Clothing Company embarked on a new advertising campaign in which a group of young beautiful people are having fun eating out at a restaurant wearing the company's clothes. Critics of advertising argue that this advertisement

Correct Answer
verified

Correct Answer
verified

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $120 and a constant marginal cost of $12 per unit. We can conclude that

Correct Answer
verified

Advertising

Correct Answer
verified

Exam 16: Monopolistic Competition

When a monopolistically competitive firm raises its price,

Correct AnswerverifiedShow Answer

In the short run, a firm in a monopolistically competitive market operates much like a

Correct AnswerverifiedShow Answer

In a long-run equilibrium,

Correct AnswerverifiedShow Answer

A monopolistically competitive market is like both a competitive market and a monopoly in that

Correct AnswerverifiedShow Answer

Monopolistic competition is an

Correct AnswerverifiedShow Answer

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Correct AnswerverifiedRecognizable brand names signal quality ...View AnswerShow Answer

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct AnswerverifiedShow Answer

Which of the following markets impose deadweight losses on society?

Correct AnswerverifiedShow Answer

Which of the following industries has the highest concentration ratio?

Correct AnswerverifiedShow Answer

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much profit or loss will it earn?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

When a firm operates at efficient scale, it is producing at the minimum point on its average total cost curve.

Correct AnswerverifiedShow Answer

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Correct AnswerverifiedShow Answer

When existing firms lose customers and profits due to entry of a new competitor, a

Correct AnswerverifiedShow Answer

The LookGood BePopular (LGBP) Clothing Company embarked on a new advertising campaign in which a group of young beautiful people are having fun eating out at a restaurant wearing the company's clothes. Critics of advertising argue that this advertisement

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $120 and a constant marginal cost of $12 per unit. We can conclude that

Correct AnswerverifiedShow Answer

Advertising

Correct AnswerverifiedShow Answer

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Recognizable brand names signal quality ...
View Answer

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