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

Because the monopolistically competitive firm faces a ________ demand curve for its product, it ________ the price of its output.

One way by which firms differentiate their products is to find a market niche.

Suppose a monopolistically competitive firm sells 25 units at a price of $10. Calculate its marginal revenue per unit of output if it sells 5 more units of output when it reduced its price to $9.

Which of the following statements is true?

Which of the following statements is true about marginal revenue?

One of the assumptions of monopolistic competition is that firms produce differentiated products. What does this assumption imply about the demand curve facing a representative firm?

-Refer to Figure 10-8. At the profit-maximising output level, the firm will

-Refer to Table 10-5. At the profit-maximising or loss-minimising output level

Which of the following describes the relative positions of the demand curve and the average total cost (ATC) curve of a monopolistically competitive firm that earns a profit in the short run?

When a monopolistically competitive firm lowers its price, one good thing happens to the firm. What is this 'one good thing' called?

-Refer to Table 10-4. Victoria's profit-maximising quantity sold (Q) and price (P) are

-Refer to Figure 10-6. Suppose Dell finds the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced is as shown by Figure 10-6. Dell will maximise profits if it produces ________ notebook computers per month.

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

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1674 and total revenue is $2000, its average profit is

-Refer to Table 10-3. What is the amount of the firm's loss at its optimal output level?

In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers.

-Refer to Figure 10-14. What is the profit-maximising output level?

-Refer to Figure 10-13. If the diagram represents a typical firm in the designer watch market, what is likely to happen in the long run?

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

-Refer to Figure 10-8. Based on the diagram, one can conclude that