Question 1

A monopolistically competitive firm that earns an accounting profit in the short run

Accepted Answer

A) must also earn an economic profit in the short run. 
B) does not earn enough to earn an economic profit in the short run. 
C) could earn an economic profit, break even, or suffer an economic loss in the short run. 
D) could earn an economic profit or break even, but could not suffer an economic loss in the short run. 
A) must also earn an economic profit in the short run. 
B) does not earn enough to earn an economic profit in the short run. 
C) could earn an economic profit, break even, or suffer an economic loss in the short run. 
D) could earn an economic profit or break even, but could not suffer an economic loss in the short run.

Question 2

When a firm faces a downward-sloping demand curve, marginal revenue

Accepted Answer

A) must exceed price because the price effect outweighs the output effect. 
B) is less than price because a firm must lower its price to sell more. 
C) equals price because the firm sells a standardized product. 
D) must exceed price because the output effect outweighs the price effect. 
A) must exceed price because the price effect outweighs the output effect. 
B) is less than price because a firm must lower its price to sell more. 
C) equals price because the firm sells a standardized product. 
D) must exceed price because the output effect outweighs the price effect.

Question 3

Which of the following is true of trademarks?

Accepted Answer

A) A successful trademark is one that becomes a generic name for a product, for example, "Xerox" has become a generic term for making photocopies. 
B) A successful trademark is one that allows consumers to immediately identify the source or producer of the product. 
C) If a firm is granted a trademark, then no other firms can legally produce similar products for a given period of time. 
D) If a firm is granted a trademark, then no other firms can legally sell in the same geographic area for a given period of time. 
A) A successful trademark is one that becomes a generic name for a product, for example, "Xerox" has become a generic term for making photocopies. 
B) A successful trademark is one that allows consumers to immediately identify the source or producer of the product. 
C) If a firm is granted a trademark, then no other firms can legally produce similar products for a given period of time. 
D) If a firm is granted a trademark, then no other firms can legally sell in the same geographic area for a given period of time.

Question 4

A trademark grants a firm legal protection against other firms using the name of its product.When a firm has been granted a trademark, it

Accepted Answer

A) still faces the possibility that the name will become widely used and no longer associated with a specific company. 
B) does not have to worry about legally enforcing the trademark; this is the responsibility of the legal system. 
C) still must apply for a copyright and a patent to ensure that no other firm will use the product's name. 
D) must spend an annual amount on advertising the product each year; the amount it must spend is negotiated by the firm and the government agency that grants the trademark. 
A) still faces the possibility that the name will become widely used and no longer associated with a specific company. 
B) does not have to worry about legally enforcing the trademark; this is the responsibility of the legal system. 
C) still must apply for a copyright and a patent to ensure that no other firm will use the product's name. 
D) must spend an annual amount on advertising the product each year; the amount it must spend is negotiated by the firm and the government agency that grants the trademark.

Question 5

The marketing of the first ballpoint pen by Milton Reynolds showed

Accepted Answer

A) that first-mover advantages can make it more difficult for new firms to enter a market and compete against the first mover. 
B) that being the first firm to market a new product can result in a natural monopoly. 
C) that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market. 
D) how important it is to receive patent protection for a new product. 
A) that first-mover advantages can make it more difficult for new firms to enter a market and compete against the first mover. 
B) that being the first firm to market a new product can result in a natural monopoly. 
C) that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market. 
D) how important it is to receive patent protection for a new product.

Question 6

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

Accepted Answer

A) demand for "fast -casual" food is very high. 
B) it is trendy and therefore is likely to have a customer following. 
C) barriers to entry are low. 
D) consumption takes place in public. 
A) demand for "fast -casual" food is very high. 
B) it is trendy and therefore is likely to have a customer following. 
C) barriers to entry are low. 
D) consumption takes place in public.

Question 7

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

Accepted Answer

A) $1,188. 
B) $1,092.30. 
C) $95.70. 
D) $1.45. 
A) $1,188. 
B) $1,092.30. 
C) $95.70. 
D) $1.45.

Question 8

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following describes the relative positions of the demand curve and the average total cost (ATC)curve of a monopolistically competitive firm that earns a profit in the short run?

Accepted Answer

A) In the short run, the firm's demand curve will lie above its ATC curve. The demand curve will be tangent to the ATC curve in the long run. 
B) In the short run, the firm's demand curve will lie below its ATC curve. The demand curve will be tangent to the ATC curve in the long run. 
C) In the short run, the firm's demand curve will cross its ATC curve at the ATC curve's lowest point. The demand curve will be above the ATC curve in the long run. 
D) In the short run, the firm's ATC curve will cross the demand curve at the profit-maximizing level of output. The demand curve will be tangent to the ATC curve in the long run. 
A) In the short run, the firm's demand curve will lie above its ATC curve. The demand curve will be tangent to the ATC curve in the long run. 
B) In the short run, the firm's demand curve will lie below its ATC curve. The demand curve will be tangent to the ATC curve in the long run. 
C) In the short run, the firm's demand curve will cross its ATC curve at the ATC curve's lowest point. The demand curve will be above the ATC curve in the long run. 
D) In the short run, the firm's ATC curve will cross the demand curve at the profit-maximizing level of output. The demand curve will be tangent to the ATC curve in the long run.

Question 10

Figure 13-13
  
-Refer to Figure 13-13.What is the profit-maximizing output level?

Accepted Answer

A) Q₁ units 
B) Q₂ units 
C) Q₃ units 
D) Q₄ units 
A) Q₁ units 
B) Q₂ units 
C) Q₃ units 
D) Q₄ units

Question 11

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 Eco Energy's profit?

Accepted Answer

A) $125 
B) $140 
C) $145 
D) $150 
A) $125 
B) $140 
C) $145 
D) $150

Question 12

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

Accepted Answer

A) True 
 B)False

A monopolistically competitive firm that earns an accounting profit in the short run

When a firm faces a downward-sloping demand curve, marginal revenue

Which of the following is true of trademarks?

A trademark grants a firm legal protection against other firms using the name of its product.When a firm has been granted a trademark, it

The marketing of the first ballpoint pen by Milton Reynolds showed

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

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

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

Which of the following describes the relative positions of the demand curve and the average total cost (ATC)curve of a monopolistically competitive firm that earns a profit in the short run?

Figure 13-13 -Refer to Figure 13-13.What is the profit-maximizing output level?

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 Eco Energy's profit?

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

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 monopolistically competitive firm that earns an accounting profit in the short run

When a firm faces a downward-sloping demand curve, marginal revenue

Which of the following is true of trademarks?

A trademark grants a firm legal protection against other firms using the name of its product.When a firm has been granted a trademark, it

The marketing of the first ballpoint pen by Milton Reynolds showed

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

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

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

Which of the following describes the relative positions of the demand curve and the average total cost (ATC)curve of a monopolistically competitive firm that earns a profit in the short run?

Figure 13-13 -Refer to Figure 13-13.What is the profit-maximizing output level?

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 Eco Energy's profit?

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

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