Exam 15: Monopolistic Competition and Product Differentiation

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

Which of the following is TRUE?

Use the following to answer questions: -(Table: Spring Water) The table Spring Water shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. If the industry were in perfect competition, the profit-maximizing price would be:

Toby operates a small deli in a monopolistically competitive restaurant industry. In long-run equilibrium, the profit-maximizing price of the three-meat sandwich is $3. Price also equals his average total cost. Toby's minimum average total cost is less than $3.

For the monopolistically competitive wild-caught seafood market, the demand curve for any individual firm is _____, and there are _____ producers of seafood.

Use the following to answer questions: Figure: The Restaurant Market -(Figure: The Restaurant Market) The figure The Restaurant Market shows curves facing a typical restaurant. Assume that many firms, differentiated products, and easy entry and exit characterize the restaurant market. For the restaurant shown here, the profit-maximizing price is:

Budweiser is a widely recognized brand name. During the Super Bowl each year, this beer company has many of the most successful ads. Which of the following is TRUE about advertising for Budweiser?

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

The conditions for profit maximization and the analysis of short-run equilibrium are identical for monopoly and for a monopolistically competitive firm.

A monopolistically competitive firm is operating in the short run at the optimal level of output and is earning negative economic profits. Which of the following must be TRUE?

Because most communities have a large number of similar but not identical substitutes, the market for florists is best considered:

In monopolistic competition:

Toby operates a small deli downtown. The deli industry is monopolistically competitive. Toby, along with every other deli in town, is producing the quantity that minimizes average total cost. Assuming the delis are maximizing profits, the:

Consumers' differing tastes are one reason monopolistic:

The profit-maximizing rule, expressed as _____, is adhered to by firms operating in a market that is _____.

A monopolistically competitive firm has a downward-sloping demand curve for its product, primarily because:

When initially a monopolistically competitive industry earns economic profit, the result of competition among sellers is usually that:

Use the following to answer questions: Figure: Monopolistic Competitor -(Figure: Monopolistic Competitor) The firm shown in the figure Monopolistic Competitor may engage in advertising because:

Use the following to answer questions: Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm, Q = 160 - P; MC = 20 + 2Q; and TC = 20Q + Q² + 20. -(Scenario: Monopolistically Competitive Firm) Given the information in the scenario Monopolistically Competitive Firm, what is the fixed cost for this firm?

A monopolistically competitive firm is operating in the short run at the optimal level of output and earns negative economic profits. Describe how this industry will adjust in the long run.