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

Figure 13-4 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4. What is the area that represents the loss incurred by the firm?

Figure 13-18 -Refer to Figure 13-18. The diagram demonstrates that

For a monopolistically competitive firm, marginal revenue

If firms in a monopolistically competitive industry are making profits in the short run, then

Figure 13-13 -Refer to Figure 13-13. If the diagram represents a typical firm in the market, what is likely to happen to its average cost of production in the long run?

The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair. It sells 8 pairs of jeans per day at a price of $90 per pair. The marginal revenue of the eighth pair of jeans is

In the highly competitive fast-food restaurant market, brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

Figure 13-13 -Refer to Figure 13-13. What is the area that represents the firm's profit?

Table 13-1 -Refer to Table 13-1. What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run?

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

In the short run, a profit-maximizing firm's decision to produce should be guided by whether

In 2011, Red Robin announced that it would open 12 fast-casual restaurants, and in 2016 the company decided to abandon the fast-casual restaurant business. Which of the following reasons relating to the characteristics of monopolistic competition did the company give for getting out of the fast-casual restaurant business?

Because the monopolistically competitive firm faces a ________ demand curve for its product, it ________ the price of its output.

For the monopolistically competitive firm,

Which of the following statements is true about advertising by a monopolistically competitive firm?

In a monopolistically competitive market, a successful new restaurant

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

What are the key factors that determine the profitability of a firm in a monopolistically competitive market?

In long-run equilibrium, compared to a perfectly competitive market, a monopolistically competitive industry produces a ________ level of output and charges a ________ price.