Exam 10: Monopolistic Competition: The Competitive Model in a More Realistic

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets benefit consumers despite any loss of well-being?

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

If a perfectly competitive firm maximises short-run profits, its marginal revenue will be positive and less than its price.

Figure 10.18 -Refer to Figure 10.18.Which of the following statements is true?

Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because

What is meant by 'excess capacity'? How does it relate to consumer utility? __________________________________________________________________________________________________________________________________________________________________________________________

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

Unlike a perfectly competitive firm, a monopolistic competitor does not have a short-run shut-down point.

Figure 10.1 -Refer to Figure 10.1.The marginal revenue from the increase in price from P₀ to P₁ equals

Which of the following is true if a monopolistically competitive firm has excess capacity?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

What must be true for productive efficiency to hold?

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

Table 10.5 Table 10.5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 10.5.The firm's profit-maximising or loss-minimising price and quantity are

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

Which of the following is a key characteristic of a monopolistically competitive market?

Table 10.1 -Refer to Table 10.1.What does the table show?

Consumers in a monopolistically competitive market do not receive any consumer surplus because the price paid for the product exceeds the marginal cost of production.

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

The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However, it is possible for a firm to continue to earn economic profits if the firm