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. If the firm represented in the diagram is currently producing and selling Q_a units, what is the price charged?

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18. If the average total cost at this output is $16.55, then its total profit is

The marginal revenue of a monopolistically competitive firm

Firms in monopolistic competition compete by selling similar, but not identical products.

Productive efficiency does not hold for a profit-maximizing, monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies of scale region of its average total cost curve.

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3. If this firm continues to produce, what is likely to happen to the product's price in the long run?

Table 13-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules. -Refer to Table 13-2. What is likely to happen to the product's price in the long run?

A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

In both monopolistically competitive and perfectly competitive industries

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3. What is its average variable cost of production at its optimal output level?

You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant from your competitors by offering northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant market in your hometown after you open?

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 13-8. At the profit-maximizing output level the firm will

Figure 13-17 -Refer to Figure 13-17. What is the allocatively efficient output for the firm represented in the diagram?

In the long run, firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits, but unlike perfectly competitive firms in the long run, monopolistically competitive firms

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss?

If some monopolistically competitive firms exit their market after suffering short-run losses, the demand curves of remaining firms will shift to the right.

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. Should the firm represented in the diagram continue to stay in business despite its losses?

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

One reason why the "fast-casual" restaurant market is competitive is that

Monopolistically competitive firms can differentiate their products