Question 1

Firms in monopolistic competition differentiate their products through

Accepted Answer

A)  physical characteristics. 
B)  price. 
C)  Both A and B are correct. 
D)  Neither A nor B is correct. 
A)  physical characteristics. 
B)  price. 
C)  Both A and B are correct. 
D)  Neither A nor B is correct. A

Question 2

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce ________ units and charge ________ per unit.

Accepted Answer

A)  7; $50 
B)  10; $48 
C)  11; $48 
D)  10; $45 
A)  7; $50 
B)  10; $48 
C)  11; $48 
D)  10; $45 C

Question 3

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

Accepted Answer

A)  Firms have free entry. 
B)  Identical products are produced by all sellers. 
C)  Firms face downward sloping demand curves. 
D)  Firms are price takers. 
A)  Firms have free entry. 
B)  Identical products are produced by all sellers. 
C)  Firms face downward sloping demand curves. 
D)  Firms are price takers. C

Question 4

For monopolistically competitive firms in long-run equilibrium,

Accepted Answer

A)  the demand curve must intersect average total cost at its minimum. 
B)  the demand curve must be tangent to the average total cost curve at its minimum. 
C)  at the profit-maximizing quantity, the demand curve must intersect the average total cost curve quantity. 
D)  at the profit-maximizing quantity, the demand curve must be tangent to the average total cost curve. 
A)  the demand curve must intersect average total cost at its minimum. 
B)  the demand curve must be tangent to the average total cost curve at its minimum. 
C)  at the profit-maximizing quantity, the demand curve must intersect the average total cost curve quantity. 
D)  at the profit-maximizing quantity, the demand curve must be tangent to the average total cost curve.

Question 5

One key difference between profit-maximizing firms in monopolistic competition versus perfect competition is that

Accepted Answer

A)  monopolistically competitive firms will earn a positive profit in the long run. 
B)  perfectly competitive firms break even in the long run, but monopolistically competitive firms do not. 
C)  monopolistically competitive firms charge a price greater than marginal revenue. 
D)  none of the above 
A)  monopolistically competitive firms will earn a positive profit in the long run. 
B)  perfectly competitive firms break even in the long run, but monopolistically competitive firms do not. 
C)  monopolistically competitive firms charge a price greater than marginal revenue. 
D)  none of the above

Question 6

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate ________ of total revenue.

Accepted Answer

A)  $238 
B)  $350 
C)  $450 
D)  $528 
A)  $238 
B)  $350 
C)  $450 
D)  $528

Question 7

To maximize profit,a monopolistically competitive firm will produce where

Accepted Answer

A)  marginal revenue exceeds price. 
B)  price is less than marginal cost. 
C)  price equals average total cost. 
D)  marginal revenue equals marginal cost. 
A)  marginal revenue exceeds price. 
B)  price is less than marginal cost. 
C)  price equals average total cost. 
D)  marginal revenue equals marginal cost.

Question 8

Recall the Application about the costs involved in opening a motel to answer the following question(s).
-Recall the Application.What should an owner of a Motel 6 expect in a monopolistically competitive market?

Accepted Answer

A)  total revenue equal to total cost 
B)  keen competition for consumers 
C)  economic profit to be zero 
D)  all of the above 
A)  total revenue equal to total cost 
B)  keen competition for consumers 
C)  economic profit to be zero 
D)  all of the above

Question 9

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would earn ________ of economic profit.

Accepted Answer

A)  $42 
B)  $33 
C)  $20 
D)  $0 
A)  $42 
B)  $33 
C)  $20 
D)  $0

Question 10

In some monopolistically competitive markets,products are differentiated by location.

Accepted Answer

A) True 
 B)False

Question 11

Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).
-Recall the Application.How will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Accepted Answer

A)  The cable firm improves the quality of service and leaves the price the same. 
B)  The cable firm lowers the quality of services and lowers the price. 
C)  The cable firm increases the price without any improvements to its service. 
D)  The cable firm improves the quality of service and decreases its price. 
A)  The cable firm improves the quality of service and leaves the price the same. 
B)  The cable firm lowers the quality of services and lowers the price. 
C)  The cable firm increases the price without any improvements to its service. 
D)  The cable firm improves the quality of service and decreases its price.

Question 12

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

Accepted Answer

If losses are being incurred,some firms

Question 13

In the long run,which two curves are tangent for a firm in monopolistic competition?

Accepted Answer

A)  marginal cost and marginal revenue 
B)  marginal cost and demand 
C)  average total cost and demand 
D)  average total cost and marginal revenue 
A)  marginal cost and marginal revenue 
B)  marginal cost and demand 
C)  average total cost and demand 
D)  average total cost and marginal revenue

Question 14

Why do existing firms earn smaller profits as new firms enter an industry?

Accepted Answer

As new firms enter a market,the profit o

Question 15

Recall the Application about food and drink pricing during "happy hour" at bars and restaurants to answer the following question(s).
-Recall the Application.Each bar has a local monopoly within its neighborhood,but faces competition from other bars outside its neighborhood.The bars respond by decreasing prices.What happens to the demand curve facing each bar?

Accepted Answer

A)  It becomes flatter. 
B)  It becomes downward sloping. 
C)  It shifts to the right. 
D)  Both A and C are correct. 
A)  It becomes flatter. 
B)  It becomes downward sloping. 
C)  It shifts to the right. 
D)  Both A and C are correct.

Question 16

By using celebrities to promote a product,a firm is attempting to

Accepted Answer

A)  send a signal to consumers. 
B)  increases repeat customers. 
C)  increase sales. 
D)  all of the above 
A)  send a signal to consumers. 
B)  increases repeat customers. 
C)  increase sales. 
D)  all of the above

Question 17

When products are differentiated by location,what kind of trade-offs exist?

Accepted Answer

A)  Firms that sell the same product at different locations have a monopoly in their location, and buyers pay a higher price. 
B)  the larger the numbers of firms that sell the same product at different locations, the higher the level of variety 
C)  the smaller the numbers of firms that sell the same product at different locations, the higher the average cost of production 
D)  the larger the numbers of firms that sell the same product at different locations, the higher the average cost of production 
A)  Firms that sell the same product at different locations have a monopoly in their location, and buyers pay a higher price. 
B)  the larger the numbers of firms that sell the same product at different locations, the higher the level of variety 
C)  the smaller the numbers of firms that sell the same product at different locations, the higher the average cost of production 
D)  the larger the numbers of firms that sell the same product at different locations, the higher the average cost of production

Question 18

Which of the following characteristics is shared by both monopolistically competitive markets and perfectly competitive markets?

Accepted Answer

A)  no barriers to entry 
B)  identical products across sellers 
C)  small number of interdependent sellers 
D)  firms face downward-sloping demand curves 
A)  no barriers to entry 
B)  identical products across sellers 
C)  small number of interdependent sellers 
D)  firms face downward-sloping demand curves

Question 19

In a perfectly competitive market,an individual firm's demand curve is ________ at the market price.In a monopolistically competitive market,an individual firm's demand curve is ________.

Accepted Answer

A)  negatively sloped; positively sloped 
B)  negatively sloped; horizontal 
C)  horizontal; negatively sloped 
D)  positively sloped; negatively sloped 
A)  negatively sloped; positively sloped 
B)  negatively sloped; horizontal 
C)  horizontal; negatively sloped 
D)  positively sloped; negatively sloped

Question 20

What causes firms to want to enter a monopolistically competitive market?

Accepted Answer

Firms will want to enter any m

Firms in monopolistic competition differentiate their products through

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce units and charge per unit.

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

For monopolistically competitive firms in long-run equilibrium,

One key difference between profit-maximizing firms in monopolistic competition versus perfect competition is that

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate ________ of total revenue.

To maximize profit,a monopolistically competitive firm will produce where

Recall the Application about the costs involved in opening a motel to answer the following question(s). -Recall the Application.What should an owner of a Motel 6 expect in a monopolistically competitive market?

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would earn ________ of economic profit.

In some monopolistically competitive markets,products are differentiated by location.

Recall the Application about the price competition between satellite and cable TV services to answer the following question(s). -Recall the Application.How will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

In the long run,which two curves are tangent for a firm in monopolistic competition?

Why do existing firms earn smaller profits as new firms enter an industry?

By using celebrities to promote a product,a firm is attempting to

When products are differentiated by location,what kind of trade-offs exist?

Which of the following characteristics is shared by both monopolistically competitive markets and perfectly competitive markets?

In a perfectly competitive market,an individual firm's demand curve is at the market price.In a monopolistically competitive market,an individual firm's demand curve is .

What causes firms to want to enter a monopolistically competitive market?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 11: Market Entry and Monopolistic Competition

Firms in monopolistic competition differentiate their products through

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce ________ units and charge ________ per unit.

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

For monopolistically competitive firms in long-run equilibrium,

One key difference between profit-maximizing firms in monopolistic competition versus perfect competition is that

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate ________ of total revenue.

To maximize profit,a monopolistically competitive firm will produce where

Recall the Application about the costs involved in opening a motel to answer the following question(s). -Recall the Application.What should an owner of a Motel 6 expect in a monopolistically competitive market?

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would earn ________ of economic profit.

In some monopolistically competitive markets,products are differentiated by location.

Recall the Application about the price competition between satellite and cable TV services to answer the following question(s). -Recall the Application.How will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

In the long run,which two curves are tangent for a firm in monopolistic competition?

Why do existing firms earn smaller profits as new firms enter an industry?

By using celebrities to promote a product,a firm is attempting to

When products are differentiated by location,what kind of trade-offs exist?

Which of the following characteristics is shared by both monopolistically competitive markets and perfectly competitive markets?

In a perfectly competitive market,an individual firm's demand curve is ________ at the market price.In a monopolistically competitive market,an individual firm's demand curve is ________.

What causes firms to want to enter a monopolistically competitive market?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce units and charge per unit.

In a perfectly competitive market,an individual firm's demand curve is at the market price.In a monopolistically competitive market,an individual firm's demand curve is .