Question 1

What is the difference between the terms "marketing" and "advertising"?

Accepted Answer

Marketing consists of all the activities

Question 2

Figure 13-10   Figure 13-10 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 13-10. to answer the following questions.
a. What is the profit-maximizing output level?
b. What is the profit-maximizing price?
c. At the profit-maximizing output level, how much profit will be realized?
d. Does this graph most likely represent the long run or the short run? Why?

Accepted Answer

a. The profit-maximizing outpu

Question 3

In the United States, the average person mostly patronizes firms that operate in

Accepted Answer

A)  perfectly competitive markets. 
B)  monopolistically competitive markets. 
C)  oligopolies. 
D)  monopolies. 
A)  perfectly competitive markets. 
B)  monopolistically competitive markets. 
C)  oligopolies. 
D)  monopolies.

Question 4

The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

Accepted Answer

A)  marginal revenue equals marginal cost. 
B)  average revenue exceeds marginal cost by the greatest amount. 
C)  price equals marginal cost. 
D)  average revenue equals average total cost. 
A)  marginal revenue equals marginal cost. 
B)  average revenue exceeds marginal cost by the greatest amount. 
C)  price equals marginal cost. 
D)  average revenue equals average total cost.

Question 5

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Accepted Answer

A) True 
 B)False

Question 6

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Accepted Answer

A)  Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. 
B)  The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product. 
C)  Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency. 
D)  Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency. 
A)  Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency. 
B)  The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product. 
C)  Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency. 
D)  Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency.

Question 7

Figure 13-9  
-Refer to Figure 13-9. Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel C 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel C

Question 8

In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers.

Accepted Answer

A) True 
 B)False

Question 9

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Accepted Answer

A)  firms produce at the minimum point of their average cost curves. 
B)  price equals marginal cost. 
C)  firms break even. 
D)  price equals marginal revenue. 
A)  firms produce at the minimum point of their average cost curves. 
B)  price equals marginal cost. 
C)  firms break even. 
D)  price equals marginal revenue.

Question 10

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm

Accepted Answer

A)  expands its marketing budget. 
B)  adopts new technologies that enable it to lower its cost of production. 
C)  expands its product offerings to appeal to a wider range of consumers. 
D)  reduces its price to expand its market. 
A)  expands its marketing budget. 
B)  adopts new technologies that enable it to lower its cost of production. 
C)  expands its product offerings to appeal to a wider range of consumers. 
D)  reduces its price to expand its market.

Question 11

Brand management refers to

Accepted Answer

A)  picking a brand name for a new product that will attract attention. 
B)  the efforts to maintain the differentiation of a product over time. 
C)  efforts to reduce the cost of production. 
D)  selling the right to use a brand name in a particular market. 
A)  picking a brand name for a new product that will attract attention. 
B)  the efforts to maintain the differentiation of a product over time. 
C)  efforts to reduce the cost of production. 
D)  selling the right to use a brand name in a particular market.

Question 12

Sparkle, one of many firms in the market for toothpaste, is in a long-run equilibrium. As do all of its competitors, Sparkle has a small market share, and Sparkle has been in business for a long time.
a. Identify the market structure in which Sparkle operates. Explain your answer.
b. What is Sparkle's profit or loss? Explain your answer. If you cannot determine the profit or loss, explain what information is missing.
c. Draw a diagram showing Sparkle's demand curve, marginal revenue curve, average total cost curve, and marginal cost curve. Label your diagram.

Accepted Answer

a. Monopolistic competition; p

Question 13

Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur?

Accepted Answer

A)  New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left. 
B)  New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left. 
C)  New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right. 
D)  New firms that sell Italian ice will enter the market and Tony's demand curve will become more inelastic. 
A)  New firms that sell Italian ice will enter the market and Tony's cost curves will shift to the left. 
B)  New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the left. 
C)  New firms that sell Italian ice will enter the market and Tony's demand curve will shift to the right. 
D)  New firms that sell Italian ice will enter the market and Tony's demand curve will become more inelastic.

Question 14

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

Accepted Answer

A)  substitution effect. 
B)  income effect. 
C)  price effect. 
D)  output effect. 
A)  substitution effect. 
B)  income effect. 
C)  price effect. 
D)  output effect.

Question 15

In monopolistic competition there is/are

Accepted Answer

A)  many sellers who each face a downward-sloping demand curve. 
B)  a few sellers who each face a downward-sloping demand curve. 
C)  only one seller who faces a downward-sloping demand curve. 
D)  many sellers who each face a perfectly elastic demand curve. 
A)  many sellers who each face a downward-sloping demand curve. 
B)  a few sellers who each face a downward-sloping demand curve. 
C)  only one seller who faces a downward-sloping demand curve. 
D)  many sellers who each face a perfectly elastic demand curve.

Question 16

Juicy Couture has been successful in selling women's clothing using an unusual strategy. According to an article in the Wall Street Journal, the key to the firm's strategy is to "limit distribution to maintain the brand's exclusive cachet, even if that means sacrificing sales, a brand-management technique once used only for high-end luxury brands." In 2006, Juicy clothes were sold in only four department stores: Neiman Marcus, Saks, Bloomingdale's, and Nordstrom. In 2006, its sales have more than quadrupled since 2002.
Source: Rachel Dodes, "From Track Suits to Fast Track," Wall Street Journal, September 13, 2006.
How does limiting the number of stores in which Juicy's products are sold contribute to its success?

Accepted Answer

A)  By sacrificing sales, the company was able to focus on producing high-quality products. 
B)  It enables Juicy to price its products at a premium and differentiate them from lower-priced products. 
C)  It helps establish Juicy's products as luxury items favored by the very wealthy. 
D)  Maintaining the exclusivity of a product increases the demand for the product. 
A)  By sacrificing sales, the company was able to focus on producing high-quality products. 
B)  It enables Juicy to price its products at a premium and differentiate them from lower-priced products. 
C)  It helps establish Juicy's products as luxury items favored by the very wealthy. 
D)  Maintaining the exclusivity of a product increases the demand for the product.

Question 17

Why would an organization as large as the National Football League (NFL) incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

Accepted Answer

The National Football League has spent a

Question 18

Why are many companies concerned about brand management?

Accepted Answer

Firms are concerned about bran

Question 19

Suppose a monopolistically competitive firm sells 25 units at a price of $10. Calculate its marginal revenue per unit of output if it sells 5 more units of output when it reduced its price to $9.

Accepted Answer

A)  $270 
B)  $20 
C)  $4 
D)  $2.50 
A)  $270 
B)  $20 
C)  $4 
D)  $2.50

Question 20

How would a marketing campaign directed at single women improve the chances of success at a place like a cigar bar?

Accepted Answer

By marketing to single women, a cigar ba

Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

What is the difference between the terms "marketing" and "advertising"?

In the United States, the average person mostly patronizes firms that operate in

The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

Figure 13-9 -Refer to Figure 13-9. Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers.

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm

Brand management refers to

Tony's Italian Ice is a monopolistically competitive firm. If Tony's earns a profit in the short run, which of the following is most likely to occur?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

In monopolistic competition there is/are

Why would an organization as large as the National Football League (NFL) incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

Why are many companies concerned about brand management?

Suppose a monopolistically competitive firm sells 25 units at a price of $10. Calculate its marginal revenue per unit of output if it sells 5 more units of output when it reduced its price to $9.

How would a marketing campaign directed at single women improve the chances of success at a place like a cigar bar?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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