Exam 14: Monopolistic Competition

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's markup is ________ per calculator.

In the long-run, a firm in monopolistic competition produces an amount of output that sets

-The firm in the figure above is in monopolistic competition. It will set a price equal to

Monopolistic competition is a market structure in which

-Fresh Taste, Inc. produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive. The figure above shows the demand curve that Fresh Taste faces (D), the company's marginal revenue curve (MR), its marginal cost curve (MC), and its average total cost curve (ATC). Fresh Taste produces ________ thousand boxes of cereals per day and sets a price of ________ a box.

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift ________ and the MR curve will shift ________.

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

-Draw an example of a firm in monopolistic competition that is earning an economic profit. Be sure to label all the curves. Indicate the area that equals the firm's economic profit.

-The figure above shows Bill's Hotdogs, a monopolistically competitive firm. If other firms enter the market and have hot dogs that are very close substitutes for Bill's Hotdogs, then the demand curve for Bill's Hotdogs will ________.

A textbook publisher is in monopolistic competition. The firm can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's average variable cost and marginal cost is a constant $20 per book. What is the publisher's profit-maximizing level of output?

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Product differentiation exists within an industry if

In monopolistic competition, the presence of a large number of firms making a differentiated product means that

In the long run, a firm in monopolistic competition will

-The figure above shows a firm in monopolistic competition. If all firms in the industry have the demand and cost curves illustrated in the figure, then in the long run

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

-If all firms in a monopolistically competitive industry faced the same demand and cost curves pictured in the above figure

A textbook publisher is in monopolistic competition. If the firm spends nothing on advertising, it can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's total fixed cost is $2,400 a day. Its average variable cost and marginal cost is a constant $20 per book. If the firm spends $1,200 a day on advertising, it can increase the quantity of books sold at each price by 50 percent. Compared to the situation if it does not advertise, if the firm advertises, its economic profit

In monopolistic competition in the long run, firms ________.

In monopolistic competition, each firm has a demand curve with a ________ and there ________ barriers to entry into the market.