Question 1

In a monopolistically competitive market, a successful new restaurant

Accepted Answer

A) can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants. 
B) will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product. 
C) will face high entry barriers because of health and safety regulations to which all restaurants are subject. 
D) must obtain a trademark to ensure that it will break even in the long run. 
A) can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants. 
B) will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product. 
C) will face high entry barriers because of health and safety regulations to which all restaurants are subject. 
D) must obtain a trademark to ensure that it will break even in the long run. B

Question 2

For allocative efficiency to hold,

Accepted Answer

A) price must equal marginal revenue of the last unit sold. 
B) price must equal the marginal cost of the last unit produced. 
C) the average variable cost must be minimized in production. 
D) the average total cost must be minimized in production. 
A) price must equal marginal revenue of the last unit sold. 
B) price must equal the marginal cost of the last unit produced. 
C) the average variable cost must be minimized in production. 
D) the average total cost must be minimized in production. B

Question 3

Is a monopolistically competitive firm productively efficient?

Accepted Answer

A) No, because it does not produce at minimum average total cost. 
B) Yes, because it produces where marginal cost equals marginal revenue. 
C) No, because price is greater than marginal cost. 
D) Yes, because price equals average total cost. 
A) No, because it does not produce at minimum average total cost. 
B) Yes, because it produces where marginal cost equals marginal revenue. 
C) No, because price is greater than marginal cost. 
D) Yes, because price equals average total cost. A

Question 4

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Accepted Answer

A) $326. 
B) $40. 
C) $6.52. 
D) impossible to determine without additional information. 
A) $326. 
B) $40. 
C) $6.52. 
D) impossible to determine without additional information.

Question 5

Figure 13-11
  
-Refer to Figure 13-11.The diagram depicts a firm

Accepted Answer

A) in a constant-cost industry. 
B) in an increasing-cost industry. 
C) in long-run equilibrium. 
D) that is incurring short-run losses. 
A) in a constant-cost industry. 
B) in an increasing-cost industry. 
C) in long-run equilibrium. 
D) that is incurring short-run losses.

Question 6

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Accepted Answer

A) new rivals entering the market. 
B) a decrease in demand for its product. 
C) demand for the firm's product becomes more elastic. 
D) a decrease in the number of rival products. 
A) new rivals entering the market. 
B) a decrease in demand for its product. 
C) demand for the firm's product becomes more elastic. 
D) a decrease in the number of rival products.

Question 7

If a monopolistically competitive firm breaks even, the firm

Accepted Answer

A) is earning an accounting profit and will have to pay taxes on that profit. 
B) is earning zero accounting and zero economic profit. 
C) should advertise its product to stimulate demand. 
D) should expand production. 
A) is earning an accounting profit and will have to pay taxes on that profit. 
B) is earning zero accounting and zero economic profit. 
C) should advertise its product to stimulate demand. 
D) should expand production.

Question 8

Why are many companies concerned about brand management?

Accepted Answer

Firms are concerned about bran

Question 9

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Accepted Answer

A) Demand decreases and becomes less elastic. 
B) Demand decreases and becomes more elastic. 
C) Demand increases and becomes less elastic. 
D) Demand increases and becomes more elastic. 
A) Demand decreases and becomes less elastic. 
B) Demand decreases and becomes more elastic. 
C) Demand increases and becomes less elastic. 
D) Demand increases and becomes more elastic.

Question 10

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

Accepted Answer

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

Question 11

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

Accepted Answer

A) $20. 
B) $90. 
C) $100. 
D) $700. 
A) $20. 
B) $90. 
C) $100. 
D) $700.

Question 12

What are the formulas for total revenue, average revenue, and marginal revenue.

Accepted Answer

Total revenue equals price × q

Question 13

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.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

Accepted Answer

A) $275 
B) $145 
C) $35 
D) $20 
A) $275 
B) $145 
C) $35 
D) $20

Question 14

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

Accepted Answer

A) earn a profit of $176. 
B) break even. 
C) earn a profit of $88. 
D) earn a profit of $60. 
A) earn a profit of $176. 
B) break even. 
C) earn a profit of $88. 
D) earn a profit of $60.

Question 15

Article Summary
In Colorado, recreational marijuana is legal but smoking in hotels is not. Former Wall Street lawyer Joel Schneider found a way around this legal conundrum by opening a bed-and-breakfast (B&B), which he refers to as Bud+Breakfast. In Colorado, B&Bs are considered private property and therefore not subject to the no-smoking laws, and Schneider does not allow guests under the age of 21, the legal age to buy marijuana in the state. With six suites ranging from $299 - $399 per night, revenues in 2016 averaged $110,000 per month. His success has allowed him to expand to three properties, with hopes of franchising to other states where recreational marijuana is also legal. 
Source: Jane Wells, "Weed entrepreneur brings in over $1 million a year running 'bud and breakfast' hotels," cnbc.com, January 18, 2017.
-Refer to the Article Summary.By marketing to recreational marijuana users, Joel Schneider is trying to set his business apart from competing hotels and lodging establishments.This is an example of

Accepted Answer

A) defending a brand name. 
B) blocking entry into the market. 
C) legally enforcing a trademark. 
D) product differentiation. 
A) defending a brand name. 
B) blocking entry into the market. 
C) legally enforcing a trademark. 
D) product differentiation.

Question 16

A monopolistically competitive market is described as one in which there are

Accepted Answer

A) a few firms producing an identical product. 
B) a large number of firms selling similar, but not identical, products. 
C) a few firms producing differentiated products. 
D) one large firm and many small firms producing identical products. 
A) a few firms producing an identical product. 
B) a large number of firms selling similar, but not identical, products. 
C) a few firms producing differentiated products. 
D) one large firm and many small firms producing identical products.

Question 17

Figure 13-17
  
-Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Accepted Answer

A) Its average cost of production will fall and its profit will rise. 
B) It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C) It will move from a zero profit situation to a profit situation. 
D) It will move from a zero profit situation to a loss situation. 
A) Its average cost of production will fall and its profit will rise. 
B) It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C) It will move from a zero profit situation to a profit situation. 
D) It will move from a zero profit situation to a loss situation.

Question 18

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Accepted Answer

A) differentiate Air Jordan basketball shoes from other types of basketball shoes. 
B) lower the marginal cost of producing Air Jordan basketball shoes. 
C) increase its profit by raising the price of Air Jordan basketball shoes. 
D) convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities. 
A) differentiate Air Jordan basketball shoes from other types of basketball shoes. 
B) lower the marginal cost of producing Air Jordan basketball shoes. 
C) increase its profit by raising the price of Air Jordan basketball shoes. 
D) convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities.

Question 19

Which of the following statements is true about marginal revenue?

Accepted Answer

A) If marginal revenue is zero, it means that quantity demanded falls to zero when a firm changes its price. 
B) If marginal revenue is negative, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. 
C) If marginal revenue is positive, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. 
D) Marginal revenue increases as price falls and quantity sold increases. 
A) If marginal revenue is zero, it means that quantity demanded falls to zero when a firm changes its price. 
B) If marginal revenue is negative, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. 
C) If marginal revenue is positive, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. 
D) Marginal revenue increases as price falls and quantity sold increases.

Question 20

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Accepted Answer

A) Price, average revenue, and marginal revenue are all equal. 
B) Price, average revenue, and marginal revenue are all different. 
C) Price equals average revenue but is greater than marginal revenue. 
D) Price equals average revenue but is less than marginal revenue. 
A) Price, average revenue, and marginal revenue are all equal. 
B) Price, average revenue, and marginal revenue are all different. 
C) Price equals average revenue but is greater than marginal revenue. 
D) Price equals average revenue but is less than marginal revenue.

In a monopolistically competitive market, a successful new restaurant

For allocative efficiency to hold,

Is a monopolistically competitive firm productively efficient?

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

If a monopolistically competitive firm breaks even, the firm

Why are many companies concerned about brand management?

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

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

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

What are the formulas for total revenue, average revenue, and marginal revenue.

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.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

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

A monopolistically competitive market is described as one in which there are

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Which of the following statements is true about marginal revenue?

Which of the following is true for a firm with a downward-sloping demand curve for its product?

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

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Exam 13: Monopolistic Competition: the Competitive Model in a

In a monopolistically competitive market, a successful new restaurant

For allocative efficiency to hold,

Is a monopolistically competitive firm productively efficient?

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

If a monopolistically competitive firm breaks even, the firm

Why are many companies concerned about brand management?

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

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

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

What are the formulas for total revenue, average revenue, and marginal revenue.

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.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

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

A monopolistically competitive market is described as one in which there are

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Which of the following statements is true about marginal revenue?

Which of the following is true for a firm with a downward-sloping demand curve for its product?

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

Filters