Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure above reflects the decline in sales that Starbucks experienced as a result of increased competition from companies like McDonald's and Dunkin' Donuts.Assume that as a result of the competition,Starbucks began to experience an economic loss.

Some factors that allow firms to make economic profits are beyond its control.All but one of the following is an uncontrollable factor.Which factor is controllable?

A monopolistically competitive firm maximizes profit in the short run by producing where

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?

Monopolistically competitive firms face a perfectly elastic demand curve.

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

Only one of the following statements is correct.The statements compare perfectly competitive (PC)markets and monopolistically competitive (MC)markets.Which statement is correct?

A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

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

A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

One reason Starbucks experienced a decline in sales in the late 2000s is because

The marginal revenue of a monopolistically competitive firm

A monopolistically competitive firm chooses

The table below shows the demand and cost data facing "Velvet Touches," a monopolistically competitive producer of velvet throw pillows. Use the data to answer the following questions. a.Complete the Total Revenue (TR),Marginal Revenue (MR)and Marginal Cost (MC)columns above. b.What are the profit-maximizing price and quantity for Velvet Touches? c.Is the firm making a profit or a loss? How much is the profit or loss? Show your work. d.Is this firm operating in the long run or in the short run? Explain your answer. e.If the firm's profit or loss is typical of all firms in the market for throw pillows,what is likely to happen in the future? Will there be more firms or will some existing firms leave the industry? Explain your answer. f.What will happen to the typical firm's profit or loss after all entry/exit adjustments?

Why are many companies concerned about brand management?

When new firms are encouraged to enter a monopolistically competitive market

Every firm that has the ability to affect the price of the good or service it sells will

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Figure 13-8 Figure 13-8 illustrates a monopolistically competitive firm. -Refer to Figure 13-8.Which of the following statements describes the firm depicted in the diagram?

Which of the following describes a difference between the marginal revenue and demand curves of a perfectly competitive firm and a monopolistically competitive firm?