Question 1

To maximize their profits and defend those profits from competitors, monopolistically competitive firms must

Accepted Answer

A) lobby government to erect barriers to entry in their industries. 
B) limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions. 
C) differentiate their products. 
D) achieve economies of scale. 
A) lobby government to erect barriers to entry in their industries. 
B) limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions. 
C) differentiate their products. 
D) achieve economies of scale.

Question 2

Figure 13-13
  
-Refer to Figure 13-13.What is the area that represents the firm's profit?

Accepted Answer

A) profit = 0 
B) P₄edP₂ 
C) P₄eaP₁ 
D) P₃baP₂ 
A) profit = 0 
B) P₄edP₂ 
C) P₄eaP₁ 
D) P₃baP₂

Question 3

Suppose Alexander is successful in establishing a profitable market for his vegan bakery in what is a monopolistically competitive industry.In the long run, Alexander will most likely find it ________ to remain profitable as he faces ________ competition in the vegan bakery market.

Accepted Answer

A) harder; more 
B) harder; less 
C) easier; more 
D) easier; less 
A) harder; more 
B) harder; less 
C) easier; more 
D) easier; less

Question 4

Figure 13-18
  
-Refer to Figure 13-18.Which of the following statements is true?

Accepted Answer

A) Dₐ represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the demand curve in the short run. 
B) Dₐ represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the long-run demand curve in an increasing-cost industry. 
C) Dₐ represents the long-run demand curve facing a perfect competitor while Db depicts the long-run demand curve facing a monopolistic competitor. 
D) Dₐ represents the long-run supply curve in a perfectly competitive, constant-cost industry while Db depicts the long-run demand curve facing a monopolistic competitor in a decreasing-cost industry. 
A) Dₐ represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the demand curve in the short run. 
B) Dₐ represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the long-run demand curve in an increasing-cost industry. 
C) Dₐ represents the long-run demand curve facing a perfect competitor while Db depicts the long-run demand curve facing a monopolistic competitor. 
D) Dₐ represents the long-run supply curve in a perfectly competitive, constant-cost industry while Db depicts the long-run demand curve facing a monopolistic competitor in a decreasing-cost industry.

Question 5

Monopolistically competitive firms face a perfectly elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 6

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market.An example that has been used to illustrate this is

Accepted Answer

A) McDonald's entry into the high-end coffee market. 
B) Xerox, which became a generic term for making photocopies. 
C) Abercrombie and Fitch, which was the first clothing company to market to young men. 
D) the introduction of the first ballpoint pen in 1945. 
A) McDonald's entry into the high-end coffee market. 
B) Xerox, which became a generic term for making photocopies. 
C) Abercrombie and Fitch, which was the first clothing company to market to young men. 
D) the introduction of the first ballpoint pen in 1945.

Question 7

The demand curve of a monopolistically competitive firm

Accepted Answer

A) is horizontal because the firm must cut its price to sell more. 
B) is perfectly elastic. 
C) is downward-sloping because it sells an identical product. 
D) is downward-sloping because it must cut its price to sell more. 
A) is horizontal because the firm must cut its price to sell more. 
B) is perfectly elastic. 
C) is downward-sloping because it sells an identical product. 
D) is downward-sloping because it must cut its price to sell more.

Question 8

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.

Question 9

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 10

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

Accepted Answer

A) Tony's business earns a short-run economic profit. 
B) Tony should shut down his business temporarily. 
C) Tony's profit fell after selling his 1,000th three-ring binder. 
D) Tony's profit would be greater if he sold an additional three-ring binder. 
A) Tony's business earns a short-run economic profit. 
B) Tony should shut down his business temporarily. 
C) Tony's profit fell after selling his 1,000th three-ring binder. 
D) Tony's profit would be greater if he sold an additional three-ring binder.

Question 11

In the long run, firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits, but unlike perfectly competitive firms in the long run, monopolistically competitive firms

Accepted Answer

A) charge a price that is greater than average revenue. 
B) charge a price that is equal to marginal cost. 
C) do not produce at minimum average total cost. 
D) charge a price that is equal to average total cost. 
A) charge a price that is greater than average revenue. 
B) charge a price that is equal to marginal cost. 
C) do not produce at minimum average total cost. 
D) charge a price that is equal to average total cost.

Question 12

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 13

Article Summary
Several hotel companies have begun catering to pet owners by marketing their pet-friendly policies to pet owners, creating pet-friendly rooms, and offering various hospitality programs and amenities for pet lovers. Klimpton Hotels does not change extra for pets of any size, offers room amenities such as pet beds, food and water bowls, and provide information about pet-friendly attractions in the area. Choice Hotels has over 3,000 pet-friendly locations worldwide and offers travel tips for pet owners. W Hotels accepts pets less than 40 pounds, provides owners with information about local dog parks, and also provides pet beds, food bowls, and ID tags for their 4-legged guests. Travel sites such as TripAdvisor, Expedia, Travelocity, and PetFriendly.net are also joining the trend by helping pet owners identify pet-friendly hotels and offering reviews of various accommodations.
Source: Dave Spector, "Pet-Friendly Hotels Getting A Paw Up On The Competition," mediapost.com, November 24, 2014.
-Refer to the Article Summary above.By marketing to pet owners, hotel companies like Klimpton, Choice, and W are trying to set themselves apart from competing hotel companies.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 14

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

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 15

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Accepted Answer

A) True 
 B)False

Question 16

Table 13-3
   
Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What is the best course of action for the firm in the short run?

Accepted Answer

A) It should shut down. 
B) It should stay in business because it covers some of its fixed cost. 
C) It should increase its sales by lowering its price. 
D) It should not cut its price but it should increase its sales by advertising. 
A) It should shut down. 
B) It should stay in business because it covers some of its fixed cost. 
C) It should increase its sales by lowering its price. 
D) It should not cut its price but it should increase its sales by advertising.

Question 17

A monopolistically competitive firm will

Accepted Answer

A) charge the same price as its competitors do. 
B) always produce at the minimum efficient scale of production. 
C) have some control over its price because its product is differentiated. 
D) produce an output level that is productively and allocatively efficient. 
A) charge the same price as its competitors do. 
B) always produce at the minimum efficient scale of production. 
C) have some control over its price because its product is differentiated. 
D) produce an output level that is productively and allocatively efficient.

Question 18

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.At Victoria's profit-maximizing output

Accepted Answer

A) profit equals $2. 
B) total revenue equals $24 and total cost equals $20. 
C) total revenue equals $25 and total cost equals $22. 
D) total revenue equals $21 and total cost equals $17. 
A) profit equals $2. 
B) total revenue equals $24 and total cost equals $20. 
C) total revenue equals $25 and total cost equals $22. 
D) total revenue equals $21 and total cost equals $17.

Question 19

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Accepted Answer

In both perfectly competitive and monopo

Question 20

If a restaurant like Buffalo Wild Wings has higher costs than a comparable Hooters restaurant, the only way it can have higher profits is if

Accepted Answer

A) it has more locations than Hooters. 
B) its marginal revenue is lower than the marginal revenue of Hooters. 
C) the demand for its food is higher than the demand for food at Hooters. 
D) it sells the quantity associated with its minimum average total cost. 
A) it has more locations than Hooters. 
B) its marginal revenue is lower than the marginal revenue of Hooters. 
C) the demand for its food is higher than the demand for food at Hooters. 
D) it sells the quantity associated with its minimum average total cost.

To maximize their profits and defend those profits from competitors, monopolistically competitive firms must

Figure 13-13 -Refer to Figure 13-13.What is the area that represents the firm's profit?

Suppose Alexander is successful in establishing a profitable market for his vegan bakery in what is a monopolistically competitive industry.In the long run, Alexander will most likely find it to remain profitable as he faces competition in the vegan bakery market.

Figure 13-18 -Refer to Figure 13-18.Which of the following statements is true?

Monopolistically competitive firms face a perfectly elastic demand curve.

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market.An example that has been used to illustrate this is

The demand curve of a monopolistically competitive firm

Is a monopolistically competitive firm productively efficient?

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?

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

In the long run, firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits, but unlike perfectly competitive firms in the long run, monopolistically competitive firms

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?

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

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What is the best course of action for the firm in the short run?

A monopolistically competitive firm 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.At Victoria's profit-maximizing output

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

If a restaurant like Buffalo Wild Wings has higher costs than a comparable Hooters restaurant, the only way it can have higher profits is if

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 More Realistic Setting

To maximize their profits and defend those profits from competitors, monopolistically competitive firms must

Figure 13-13 -Refer to Figure 13-13.What is the area that represents the firm's profit?

Suppose Alexander is successful in establishing a profitable market for his vegan bakery in what is a monopolistically competitive industry.In the long run, Alexander will most likely find it ________ to remain profitable as he faces ________ competition in the vegan bakery market.

Figure 13-18 -Refer to Figure 13-18.Which of the following statements is true?

Monopolistically competitive firms face a perfectly elastic demand curve.

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market.An example that has been used to illustrate this is

The demand curve of a monopolistically competitive firm

Is a monopolistically competitive firm productively efficient?

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?

After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

In the long run, firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits, but unlike perfectly competitive firms in the long run, monopolistically competitive firms

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?

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

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What is the best course of action for the firm in the short run?

A monopolistically competitive firm 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.At Victoria's profit-maximizing output

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

If a restaurant like Buffalo Wild Wings has higher costs than a comparable Hooters restaurant, the only way it can have higher profits is if

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

Suppose Alexander is successful in establishing a profitable market for his vegan bakery in what is a monopolistically competitive industry.In the long run, Alexander will most likely find it to remain profitable as he faces competition in the vegan bakery market.