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

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118, then to maximize profits the firm should increase its output.

A monopolistically competitive industry that earns economic profits in the short run will

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 quantity sold (Q)and price (P)are

Buffalo Wild Wings CEO Sally Smith decided to spend more than $200 million on restaurant renovations in an attempt to attract more lunch customers and more families.Like CEOs of other monopolistically competitive firms, Smith knew that without innovating,

Which of the following is an example of a factor that a firm's owners and managers can control in making the firm successful?

Which of the following is not a characteristic of long-run equilibrium in a monopolistically competitive market?

One way by which firms differentiate their products is to find a market niche.

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

For the monopolistically competitive firm

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q₀ to Q₁.Why wouldn't a firm expand its output to Q₁?

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

Table 13-1 -Refer to Figure 13-1.The marginal revenue from the increase in price from P₀ to P₁ equals

Explain the differences between total revenue, average revenue, and marginal revenue.

In the long-run equilibrium, a monopolistically competitive firm earning normal profit produces the allocatively efficient output level.

Firms use two marketing tools to differentiate their products.What are these two tools?

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

Which of the following is true of a typical firm in a monopolistically competitive industry?

A successful trademark is one that becomes a generic name for a product, for example, "Kleenex" has become a generic term for tissues.

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

Figure 13-12 Figure 13-12 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-12.If the diagram represents a typical firm in the designer watch market, what is likely to happen in the long run?