Question 1

A major difference between monopolistic competition and perfect competition is

Accepted Answer

A) the number of sellers in the markets. 
B) the degree by which the market demand curves slope downwards. 
C) that products are not standardized in monopolistic competition unlike in perfect competition. 
D) the barriers to entry in the two markets. 
A) the number of sellers in the markets. 
B) the degree by which the market demand curves slope downwards. 
C) that products are not standardized in monopolistic competition unlike in perfect competition. 
D) the barriers to entry in the two markets.

Question 2

The key characteristics of a monopolistically competitive market structure include

Accepted Answer

A) many small (relative to the total market)sellers acting independently. 
B) all sellers sell a homogeneous product. 
C) barriers to entry are strong. 
D) sellers have no incentive to advertise their products. 
A) many small (relative to the total market)sellers acting independently. 
B) all sellers sell a homogeneous product. 
C) barriers to entry are strong. 
D) sellers have no incentive to advertise their products.

Question 3

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

Accepted Answer

A) 22 cases 
B) 24 cases 
C) 30 cases 
D) 38 cases 
A) 22 cases 
B) 24 cases 
C) 30 cases 
D) 38 cases

Question 4

Figure 13-13
  
-Refer to Figure 13-13.What is the output price?

Accepted Answer

A) P₄ 
B) P₃ 
C) P₂ 
D) P₁ 
A) P₄ 
B) P₃ 
C) P₂ 
D) P₁

Question 5

A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

Accepted Answer

A) True 
 B)False

Question 6

A monopolistically competitive firm can convince buyers that its product has value by differentiating its product to suit consumers' preferences.

Accepted Answer

A) True 
 B)False

Question 7

In the long run, if the demand curve of a profit-maximizing monopolistically competitive firm is tangent to its average total cost curve, then

Accepted Answer

A) the firm would break even. 
B) the firm would shut down temporarily. 
C) the firm would earn enough revenue to cover its variable costs, but not its fixed costs. 
D) the firm would earn an economic profit. 
A) the firm would break even. 
B) the firm would shut down temporarily. 
C) the firm would earn enough revenue to cover its variable costs, but not its fixed costs. 
D) the firm would earn an economic profit.

Question 8

Table 13-1
  
-Refer to Table 13-1.The Table shows

Accepted Answer

A) an elastic segment of the demand schedule. 
B) an inelastic segment of the demand schedule. 
C) a demand schedule with an elastic segment from $7.50 to $6.50 followed by an inelastic segment. 
D) a demand schedule with an inelastic segment from $7.50 to $6.50 followed by an elastic segment. 
A) an elastic segment of the demand schedule. 
B) an inelastic segment of the demand schedule. 
C) a demand schedule with an elastic segment from $7.50 to $6.50 followed by an inelastic segment. 
D) a demand schedule with an inelastic segment from $7.50 to $6.50 followed by an elastic segment.

Question 9

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?

Accepted Answer

A) It will fall. 
B) It will increase. 
C) It will remain constant. 
D) This cannot be determined without information on its long-run demand curve. 
A) It will fall. 
B) It will increase. 
C) It will remain constant. 
D) This cannot be determined without information on its long-run demand curve.

Question 10

Which of the following statements is true?

Accepted Answer

A) Input prices are one of the success factors that firms can control. 
B) Consumers will buy a product only if its price is below that of its competitors. 
C) Consumers will buy a product only if it meets a need not met by competing products. 
D) Sheer chance often plays a significant role in the success or failure of a business. 
A) Input prices are one of the success factors that firms can control. 
B) Consumers will buy a product only if its price is below that of its competitors. 
C) Consumers will buy a product only if it meets a need not met by competing products. 
D) Sheer chance often plays a significant role in the success or failure of a business.

Question 11

Figure 13-3
  
-Refer to Figure 13-3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,

Accepted Answer

A) X represents the gain (price effect)and Y the loss (output effect). 
B) X + Z represents the loss (output effect)and Y the gain (price effect). 
C) Y represents the gain (output effect)and X the loss (price effect). 
D) X represents the loss (price effect)and Y + Z the gain (output effect). 
A) X represents the gain (price effect)and Y the loss (output effect). 
B) X + Z represents the loss (output effect)and Y the gain (price effect). 
C) Y represents the gain (output effect)and X the loss (price effect). 
D) X represents the loss (price effect)and Y + Z the gain (output effect).

Question 12

Figure 13-14
   
Figure 13-14 illustrates a monopolistically competitive firm.
-Refer to Figure 13-14.Which of the following statements describes the firm depicted in the diagram?

Accepted Answer

A) The firm is making no economic profit and will exit the industry. 
B) The firm is suffering an economic loss by producing at Q₀ but will break even if it increases its output to Q₁. 
C) The firm achieves productive efficiency by producing at Q₀. 
D) The firm is in long-run equilibrium and is breaking even. 
A) The firm is making no economic profit and will exit the industry. 
B) The firm is suffering an economic loss by producing at Q₀ but will break even if it increases its output to Q₁. 
C) The firm achieves productive efficiency by producing at Q₀. 
D) The firm is in long-run equilibrium and is breaking even.

Question 13

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 Qₐ units, what is the price charged?

Accepted Answer

A) P₀ 
B) P₁ 
C) P₂ 
D) P₃ 
A) P₀ 
B) P₁ 
C) P₂ 
D) P₃

Question 14

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because

Accepted Answer

A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked. 
A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked.

Question 15

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

Accepted Answer

A) True 
 B)False

Question 16

The entry and exit of firms in a monopolistically competitive market guarantee that

Accepted Answer

A) marginal revenue equals marginal cost and average total cost is minimized. 
B) firms can earn economic profits in the long run. 
C) price equals average total cost in the long run. 
D) firms can earn economic profits in the short run. 
A) marginal revenue equals marginal cost and average total cost is minimized. 
B) firms can earn economic profits in the long run. 
C) price equals average total cost in the long run. 
D) firms can earn economic profits in the short run.

Question 17

If a significant number of consumers switch from ordering food delivery from traditional restaurants to ordering from "ghost restaurants", a "ghost restaurant" will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.

Accepted Answer

A) right; right 
B) right; left 
C) left; right 
D) left; left 
A) right; right 
B) right; left 
C) left; right 
D) left; left

Question 18

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

Accepted Answer

A) downward-sloping; cannot influence 
B) horizontal; can influence 
C) horizontal; cannot influence 
D) downward-sloping; can influence 
A) downward-sloping; cannot influence 
B) horizontal; can influence 
C) horizontal; cannot influence 
D) downward-sloping; can influence

Question 19

When a monopolistically competitive firm breaks even in the long run, this is equivalent to earning a zero accounting profit.

Accepted Answer

A) True 
 B)False

Question 20

What is the difference between zero accounting profit and zero economic profit?

Accepted Answer

Economic profits take into account oppor

A major difference between monopolistic competition and perfect competition is

The key characteristics of a monopolistically competitive market structure include

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

Figure 13-13 -Refer to Figure 13-13.What is the output price?

A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

A monopolistically competitive firm can convince buyers that its product has value by differentiating its product to suit consumers' preferences.

In the long run, if the demand curve of a profit-maximizing monopolistically competitive firm is tangent to its average total cost curve, then

Table 13-1 -Refer to Table 13-1.The Table shows

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?

Which of the following statements is true?

Figure 13-3 -Refer to Figure 13-3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.Which of the following statements describes the firm depicted in the diagram?

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 Qₐ units, what is the price charged?

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

The entry and exit of firms in a monopolistically competitive market guarantee that

If a significant number of consumers switch from ordering food delivery from traditional restaurants to ordering from "ghost restaurants", a "ghost restaurant" will likely find its demand curve shifting to the and its marginal revenue curve shifting to the as more competitors enter the market.

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

When a monopolistically competitive firm breaks even in the long run, this is equivalent to earning a zero accounting profit.

What is the difference between zero accounting profit and zero economic profit?

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

Exam 13: Monopolistic Competition: the Competitive Model in a

A major difference between monopolistic competition and perfect competition is

The key characteristics of a monopolistically competitive market structure include

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

Figure 13-13 -Refer to Figure 13-13.What is the output price?

A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

A monopolistically competitive firm can convince buyers that its product has value by differentiating its product to suit consumers' preferences.

In the long run, if the demand curve of a profit-maximizing monopolistically competitive firm is tangent to its average total cost curve, then

Table 13-1 -Refer to Table 13-1.The Table shows

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?

Which of the following statements is true?

Figure 13-3 -Refer to Figure 13-3.The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit.Based on the diagram in the figure,

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.Which of the following statements describes the firm depicted in the diagram?

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 Qₐ units, what is the price charged?

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

The entry and exit of firms in a monopolistically competitive market guarantee that

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

When a monopolistically competitive firm breaks even in the long run, this is equivalent to earning a zero accounting profit.

What is the difference between zero accounting profit and zero economic profit?

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

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