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

-Refer to Figure 10-17. In the long run, why will the firm produce Q_f units and not Q_g units, which has a lower average cost of production?

For a downward-sloping demand curve, marginal revenue decreases as quantity sold increases.

-Refer to Figure 10-18. The diagram demonstrates that

-Refer to Table 10-3. What is the best course of action for the firm in the short run?

-Refer to Figure 10-14. If the diagram represents a typical firm in the market, what is likely to happen to its average cost of production in the long run?

If a firm faces a downward-sloping demand curve,

One goal a firm tries to achieve when it advertises a product is to

Although advertising raises the price of a monopolistic competitor's product, it does confer a benefit to consumers. Which of the following is a benefit to consumers?

A monopolistically competitive market is described as one in which there are

-Refer to Figure 10-7. Which of the following statements describes the best course of action for the firm depicted in the diagram?

Which of the following is a disadvantage of trademarking a firm's product?

-Refer to Figure 10-4. If the firm represented in the diagram is currently producing and selling Q_a units, what is the price charged?

What effect does the entry of new firms in a monopolistically competitive market have on the economic profits of existing firms in the market? How might existing firms attempt to counteract this effect?

In monopolistic competition there is/are

-Refer to Figure 10-17. What is the amount of excess capacity?

Unlike a perfectly competitive firm, for a monopolistically competitive firm

When new firms are encouraged to enter a monopolistically competitive market,

For allocative efficiency to hold,

A major difference between monopolistic competition and perfect competition is

Why do most firms in monopolistic competition typically make zero profit in the long run?