Exam 15: Monopolistic Competition and Product Differentiation

If the Boston doughnut market is monopolistically competitive and the firms are earning short-run profits,consumers in Boston will see less diversity in the doughnuts offered over time.

In the long run,monopolistically competitive firms:

Use the following to answer question: Figure: Comparing Long-Run Equilibriums -(Figure: Comparing Long-Run Equilibriums)Use Figure: Comparing Long-Run Equilibriums.Which statement is FALSE?

The hamburger industry has some differentiation and many firms,suggesting that the hamburger industry is more oligopolistic than it is monopolistically competitive.

Tacit collusion is not feasible in monopolistic competition because of the large number of competing firms.

Since a monopolistic competitor charges a price higher than marginal cost,there is a deadweight loss associated with monopolistic competition.

Use the following to answer question: Figure: Monopolistic Competition III -(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.In the long run,the demand curve for Pat's Pizza Parlor will shift to the _____ as competitors _____ the market.

The model of monopolistic competition characterizes a city's market for plumbing services.Suppose that the market is initially in long-run equilibrium,and then overall demand for plumbing services increases.In the short run,the price for plumbing services will _____ and total output in the market will _____.

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,in the long run,this firm can expect that: Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20.

Use the following to answer question: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing quantity of output is determined by the intersection at point:

A common example of monopolistic competition is the market for:

The market for soft drinks,which is dominated by Coca Cola and Pepsi,is BEST considered to be an example of:

In a long-run equilibrium,firms in a monopolistically competitive industry sell at a price:

Because of the lack of substitutes,the market for a newly developed and freshly patented prescription drug is BEST considered to be:

Which factor is NOT a source of product differentiation?

The model of monopolistic competition characterizes the market for plumbing services in a city.Suppose that the market is in long-run equilibrium.For a typical plumbing firm,price:

Use the following to answer question: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.The profit-maximizing output is _____ cases.

The excess capacity in monopolistic competition may be viewed as:

When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production,a firm is said to have:

When a monopolistically competitive firm is making zero economic profits,it is producing so that the average total cost curve is tangent to the demand curve.At this output: