Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

Most economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Figure 13-11 -Refer to Figure 13-11.What is the productively efficient output for the firm represented in the diagram?

A monopolistically competitive firm chooses

If a firm faces a downward-sloping demand curve

Which of the following characterizes the market that Chipotle competes in?

If a perfectly competitive firm maximizes short-run profits, its marginal revenue will be positive and less than its price.

Unlike a perfectly competitive firm, for a monopolistically competitive firm

If a significant number of consumers switch from consuming traditional baked goods to consuming vegan baked goods, a vegan bakery will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.

Table 13-4 Table 13-4 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Victoria's profit-maximizing output is where

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?

Tony's Italian Ice is a monopolistically competitive firm.If Tony's earns a profit in the short run, which of the following is most likely to occur?

In the United States, the average person mostly patronizes firms that operate in

Why are many companies concerned about brand management?

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

Figure 13-7 Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. -Refer to Figure 13-7.Which of the following is the area that represents the profit or loss experienced by the firm?

What are the key factors that determine the profitability of a firm in a monopolistically competitive market?

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

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.

Juicy Couture has been successful in selling women's clothing using an unusual strategy. According to an article in the Wall Street Journal, the key to the firm's strategy is to "limit distribution to maintain the brand's exclusive cachet, even if that means sacrificing sales, a brand-management technique once used only for high-end luxury brands." In 2006, Juicy clothes were sold in only four department stores: Neiman Marcus, Saks, Bloomingdale's, and Nordstrom.In 2006, its sales have more than quadrupled since 2002. Source: Rachel Dodes, "From Track Suits to Fast Track," Wall Street Journal, September 13, 2006. How does limiting the number of stores in which Juicy's products are sold contribute to its success?

Discuss the role of product differentiation and advertising in monopolistic competition.