Question 1

Figure 13-17
  
-Refer to Figure 13-17.What is the amount of excess capacity?

Accepted Answer

A) Qh - Qf units 
B) Qⱼ - Qf units 
C) Qⱼ - Qh units 
D) Qh - Qg units 
A) Qh - Qf units 
B) Qⱼ - Qf units 
C) Qⱼ - Qh units 
D) Qh - Qg units

Question 2

A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm's profits in the long run.But the firm can stave off competition and continue to earn economic profits if

Accepted Answer

A) it can successfully sue its competitors for copyright infringement. 
B) it can move to another country where there is less competition. 
C) it can lobby the government to establish a price floor for its product. 
D) it can find new ways to differentiate its product. 
A) it can successfully sue its competitors for copyright infringement. 
B) it can move to another country where there is less competition. 
C) it can lobby the government to establish a price floor for its product. 
D) it can find new ways to differentiate its product.

Question 3

Figure 13-9
  
-Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel A and Panel C 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel A and Panel C

Question 4

The key characteristics of a monopolistically competitive market structure include

Accepted Answer

A) few sellers. 
B) sellers selling similar but differentiated products. 
C) high barriers to entry. 
D) sellers acting to maximize revenue. 
A) few sellers. 
B) sellers selling similar but differentiated products. 
C) high barriers to entry. 
D) sellers acting to maximize revenue.

Question 5

If firms in a monopolistically competitive industry are making profits in the short run

Accepted Answer

A) barriers to entry will be erected to keep out rivals. 
B) some firms will ultimately exit the industry. 
C) they will resort to advertising wars to help sustain these profits. 
D) new firms will enter the market. 
A) barriers to entry will be erected to keep out rivals. 
B) some firms will ultimately exit the industry. 
C) they will resort to advertising wars to help sustain these profits. 
D) new firms will enter the market.

Question 6

For a monopolistically competitive firm, price equals average revenue.

Accepted Answer

A) True 
 B)False

Question 7

You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants.Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce.What is likely to happen to your business in the long run?

Accepted Answer

A) Your competitors are likely to change their menus to make their products more similar to yours. 
B) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C) If your success continues, you will be likely to establish a franchise and expand your market size. 
D) If you continue to maintain consistent quality, you will be able to earn profits indefinitely. 
A) Your competitors are likely to change their menus to make their products more similar to yours. 
B) Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C) If your success continues, you will be likely to establish a franchise and expand your market size. 
D) If you continue to maintain consistent quality, you will be able to earn profits indefinitely.

Question 8

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

Accepted Answer

A) Marginal revenue is equal to marginal cost. 
B) Price is equal to average revenue. 
C) The firm has excess capacity. 
D) Price is equal to marginal cost. 
A) Marginal revenue is equal to marginal cost. 
B) Price is equal to average revenue. 
C) The firm has excess capacity. 
D) Price is equal to marginal cost.

Question 9

Advertising is the action of a firm that is intended to maintain the differentiation of its product over time.

Accepted Answer

A) True 
 B)False

Question 10

Firms in monopolistic competition compete by selling similar, but not identical products.

Accepted Answer

A) True 
 B)False

Question 11

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 amount of the firm's loss at its optimal output level?

Accepted Answer

A) $0 
B) $41 
C) $45 
D) $50 
A) $0 
B) $41 
C) $45 
D) $50

Question 12

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 13

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

Accepted Answer

@#IMG-DLM& Refer to the graph above.For both types

Question 14

________ describes the actions a firm takes to maintain the differentiation of its product over time.

Accepted Answer

A) Product differentiation 
B) Brand management 
C) Aggressive marketing 
D) Advertising 
A) Product differentiation 
B) Brand management 
C) Aggressive marketing 
D) Advertising

Question 15

If a firm has excess capacity, it means

Accepted Answer

A) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. 
B) that the firm is not producing its minimum efficient scale of output. 
C) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. 
D) that the firm's quantity supplied exceeds its quantity demanded. 
A) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. 
B) that the firm is not producing its minimum efficient scale of output. 
C) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. 
D) that the firm's quantity supplied exceeds its quantity demanded.

Question 16

When a credit card company offers different services with its card, like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card, the credit card company is trying to

Accepted Answer

A) create a barrier to entry for competing firms. 
B) create a perfectly competitive market in which to sell its credit card. 
C) convince customers that its card has greater value than those offered by rival firms. 
D) shift the demand curve for competing firms to the right. 
A) create a barrier to entry for competing firms. 
B) create a perfectly competitive market in which to sell its credit card. 
C) convince customers that its card has greater value than those offered by rival firms. 
D) shift the demand curve for competing firms to the right.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Figure 13-9
  
-Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel A and Panel B 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel A and Panel B

Question 19

Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm?

Accepted Answer

A) The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies above its demand curve. 
B) The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies below its demand curve. 
C) The monopolistically competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a perfectly competitive firm lies below its demand curve. 
D) The marginal revenue curve of a monopolistically competitive firm lies below its demand curve; the marginal revenue curve of a perfectly competitive firm lies above its demand curve. 
A) The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies above its demand curve. 
B) The perfectly competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a monopolistically competitive firm lies below its demand curve. 
C) The monopolistically competitive firm's marginal revenue and demand curves are the same; the marginal revenue curve of a perfectly competitive firm lies below its demand curve. 
D) The marginal revenue curve of a monopolistically competitive firm lies below its demand curve; the marginal revenue curve of a perfectly competitive firm lies above its demand curve.

Question 20

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

Accepted Answer

A) True 
 B)False

Figure 13-17 -Refer to Figure 13-17.What is the amount of excess capacity?

A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm's profits in the long run.But the firm can stave off competition and continue to earn economic profits if

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

The key characteristics of a monopolistically competitive market structure include

If firms in a monopolistically competitive industry are making profits in the short run

For a monopolistically competitive firm, price equals average revenue.

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

Advertising is the action of a firm that is intended to maintain the differentiation of its product over time.

Firms in monopolistic competition compete by selling similar, but not identical products.

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 amount of the firm's loss at its optimal output level?

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

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

________ describes the actions a firm takes to maintain the differentiation of its product over time.

If a firm has excess capacity, it means

When a credit card company offers different services with its card, like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card, the credit card company is trying to

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

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm?

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

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

Figure 13-17 -Refer to Figure 13-17.What is the amount of excess capacity?

A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm's profits in the long run.But the firm can stave off competition and continue to earn economic profits if

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

The key characteristics of a monopolistically competitive market structure include

If firms in a monopolistically competitive industry are making profits in the short run

For a monopolistically competitive firm, price equals average revenue.

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

Advertising is the action of a firm that is intended to maintain the differentiation of its product over time.

Firms in monopolistic competition compete by selling similar, but not identical products.

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 amount of the firm's loss at its optimal output level?

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

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

________ describes the actions a firm takes to maintain the differentiation of its product over time.

If a firm has excess capacity, it means

When a credit card company offers different services with its card, like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card, the credit card company is trying to

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

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm?

Consumers in monopolistically competitive markets face a trade-off between paying prices greater than marginal costs and purchasing products that are more closely suited to their tastes.

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