Question 1

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A) Marginal revenue is equal to marginal cost. 
B) Price is equal to average revenue. 
C) The firm has excess capacity. 
D) Price is equal to marginal cost. 
A) Marginal revenue is equal to marginal cost. 
B) Price is equal to average revenue. 
C) The firm has excess capacity. 
D) Price is equal to marginal cost.

Question 2

Central Grocery in New Orleans is famous for its muffaletta,a large round sandwich filled with deli meats and topped with a tangy olive salad.Suppose the following table represents cost and revenue data for Central Grocery.Fill in the columns for TR,MR,MC,ATC,and profit.If Central Grocery wants to maximize profits,what price should it charge for a muffaletta,what quantity should it sell,and what will be the amount of its total profit?

Accepted Answer

@#IMG-DLM& To maximize profits,Central G

Question 3

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?

Accepted Answer

Product differentiation is a s

Question 4

Which of the following characterizes the market that Starbucks competes in?

Accepted Answer

A) All coffeehouses face horizontal demand curves. 
B) Coffeehouses sell identical products. 
C) Barriers to entry are low. 
D) There are a small number of firms. 
A) All coffeehouses face horizontal demand curves. 
B) Coffeehouses sell identical products. 
C) Barriers to entry are low. 
D) There are a small number of firms.

Question 5

In a monopolistically competitive market,a successful new restaurant

Accepted Answer

A) can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants. 
B) will earn zero economic profit in the long run because of free entry,but competition will lead restaurants to offer different versions of the same product. 
C) will face high entry barriers because of health and safety regulations to which all restaurants are subject. 
D) must obtain a trademark to ensure that it will break even in the long run. 
A) can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants. 
B) will earn zero economic profit in the long run because of free entry,but competition will lead restaurants to offer different versions of the same product. 
C) will face high entry barriers because of health and safety regulations to which all restaurants are subject. 
D) must obtain a trademark to ensure that it will break even in the long run.

Question 6

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

Accepted Answer

A) downward-sloping; cannot influence 
B) horizontal; can influence 
C) horizontal; cannot influence 
D) downward-sloping; can influence 
A) downward-sloping; cannot influence 
B) horizontal; can influence 
C) horizontal; cannot influence 
D) downward-sloping; can influence

Question 7

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

Accepted Answer

A) the output effect 
B) the price effect 
C) the income effect 
D) the substitution effect 
A) the output effect 
B) the price effect 
C) the income effect 
D) the substitution effect

Question 8

Which of the following is true of trademarks?

Accepted Answer

A) A successful trademark is one that becomes a generic name for a product,for example,"Xerox" has become a generic term for making photocopies. 
B) A successful trademark is one that allows consumers to immediately identify the source or producer of the product. 
C) If a firm is granted a trademark,then no other firms can legally produce similar products for a given period of time. 
D) If a firm is granted a trademark,then no other firms can legally sell in the same geographic area for a given period of time. 
A) A successful trademark is one that becomes a generic name for a product,for example,"Xerox" has become a generic term for making photocopies. 
B) A successful trademark is one that allows consumers to immediately identify the source or producer of the product. 
C) If a firm is granted a trademark,then no other firms can legally produce similar products for a given period of time. 
D) If a firm is granted a trademark,then no other firms can legally sell in the same geographic area for a given period of time.

Question 9

In contrast with perfect competition,excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

Accepted Answer

A) Monopolistically competitive firms produce at the minimum point on their average total cost curves. 
B) Monopolistically competitive firms face downward-sloping demand curves.In the long run,firms produce where their demand curves are tangent to their long-run average total cost curves. 
C) Monopolistically competitive firms produce where marginal revenue is equal to marginal cost. 
D) Monopolistically competitive markets have low barriers to entry. 
A) Monopolistically competitive firms produce at the minimum point on their average total cost curves. 
B) Monopolistically competitive firms face downward-sloping demand curves.In the long run,firms produce where their demand curves are tangent to their long-run average total cost curves. 
C) Monopolistically competitive firms produce where marginal revenue is equal to marginal cost. 
D) Monopolistically competitive markets have low barriers to entry.

Question 10

Figure 13-7  
-Refer to Figure 13-7.What is the area that represents the firm's profit?

Accepted Answer

A) profit = 0 
B) P4edP2 
C) P4eaP1 
D) P3baP2 
A) profit = 0 
B) P4edP2 
C) P4eaP1 
D) P3baP2

Question 11

The demand curve of a monopolistically competitive firm

Accepted Answer

A) is horizontal because the firm must cut its price to sell more. 
B) is perfectly elastic. 
C) is downward-sloping because it sells an identical product. 
D) is downward-sloping because it must cut its price to sell more. 
A) is horizontal because the firm must cut its price to sell more. 
B) is perfectly elastic. 
C) is downward-sloping because it sells an identical product. 
D) is downward-sloping because it must cut its price to sell more.

Question 12

The marketing of the first ballpoint by Milton Reynolds showed

Accepted Answer

A) that first-mover advantages can make it more difficult for new firms to enter a market and compete against the first mover. 
B) that being the first firm to market a new product can result in a natural monopoly. 
C) that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market. 
D) how important it is to receive patent protection for a new product. 
A) that first-mover advantages can make it more difficult for new firms to enter a market and compete against the first mover. 
B) that being the first firm to market a new product can result in a natural monopoly. 
C) that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market. 
D) how important it is to receive patent protection for a new product.

Question 13

If a store like hhgregg has higher costs than a comparable Best Buy store,the only way it can have higher profits is if

Accepted Answer

A) it has more locations than Best Buy. 
B) its marginal revenue is lower than Best Buy's. 
C) the demand for its goods is higher than Best Buy's. 
D) it sells the quantity associated with its minimum average total cost. 
A) it has more locations than Best Buy. 
B) its marginal revenue is lower than Best Buy's. 
C) the demand for its goods is higher than Best Buy's. 
D) it sells the quantity associated with its minimum average total cost.

Question 14

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Accepted Answer

A) True 
 B)False

Question 15

Sparkle,one of many firms in the market for toothpaste,is in long-run equilibrium.Sparkle has a small market share and has been in business for a long time.
a.Identify the market structure in which Sparkle operates.Explain your answer.
b.What is Sparkle's profit or loss? Explain your answer.If you cannot determine the profit or loss,explain what information is missing.
c.Draw a diagram showing Sparkle's demand curve,marginal revenue curve,average total cost curve and marginal cost curve.Label your diagram.

Accepted Answer

a.Monopolistic competition; pr

Question 16

Figure 13-3   Figure 13-3 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.
-Refer to Figure 13-3.Which of the following statements describes the best course of action for the firm depicted in the diagram?

Accepted Answer

A) The firm should exit the industry because its price is less than its average total cost. 
B) The firm should minimize its losses by producing Qy units and charging a price of P0. 
C) The firm should minimize its losses by producing Qy units and charging a price of P2. 
D) The firm should minimize its losses by producing Qy units and charging a price of P1. 
A) The firm should exit the industry because its price is less than its average total cost. 
B) The firm should minimize its losses by producing Qy units and charging a price of P0. 
C) The firm should minimize its losses by producing Qy units and charging a price of P2. 
D) The firm should minimize its losses by producing Qy units and charging a price of P1.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) lobby government to erect barriers to entry in their industries. 
B) limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions. 
C) differentiate their products. 
D) achieve economies of scale. 
A) lobby government to erect barriers to entry in their industries. 
B) limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions. 
C) differentiate their products. 
D) achieve economies of scale.

Question 19

Both monopolistically competitive firms and perfectly competitive firms maximize profits

Accepted Answer

A) by producing where price equals average total cost. 
B) by producing where marginal revenue equals average revenue. 
C) by producing where marginal revenue is equal to marginal cost. 
D) by producing where price equals average variable cost. 
A) by producing where price equals average total cost. 
B) by producing where marginal revenue equals average revenue. 
C) by producing where marginal revenue is equal to marginal cost. 
D) by producing where price equals average variable cost.

Question 20

Table 13-1
   Table 13-1 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories.
-Refer to Table 13-1.At Victoria's profit-maximizing output

Accepted Answer

A) profit equals $2. 
B) total revenue equals $24 and total cost equals $20. 
C) total revenue equals $25 and total cost equals $22. 
D) total revenue equals $21 and total cost equals $17. 
A) profit equals $2. 
B) total revenue equals $24 and total cost equals $20. 
C) total revenue equals $25 and total cost equals $22. 
D) total revenue equals $21 and total cost equals $17.

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

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?

Which of the following characterizes the market that Starbucks competes in?

In a monopolistically competitive market,a successful new restaurant

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

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

Which of the following is true of trademarks?

In contrast with perfect competition,excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

Figure 13-7 -Refer to Figure 13-7.What is the area that represents the firm's profit?

The demand curve of a monopolistically competitive firm

The marketing of the first ballpoint by Milton Reynolds showed

If a store like hhgregg has higher costs than a comparable Best Buy store,the only way it can have higher profits is if

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Figure 13-3 Figure 13-3 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. -Refer to Figure 13-3.Which of the following statements describes the best course of action for the firm depicted in the diagram?

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

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

Both monopolistically competitive firms and perfectly competitive firms maximize profits

Table 13-1 Table 13-1 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-1.At Victoria's profit-maximizing output

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

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

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

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?

Which of the following characterizes the market that Starbucks competes in?

In a monopolistically competitive market,a successful new restaurant

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

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

Which of the following is true of trademarks?

In contrast with perfect competition,excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

Figure 13-7 -Refer to Figure 13-7.What is the area that represents the firm's profit?

The demand curve of a monopolistically competitive firm

The marketing of the first ballpoint by Milton Reynolds showed

If a store like hhgregg has higher costs than a comparable Best Buy store,the only way it can have higher profits is if

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Figure 13-3 Figure 13-3 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. -Refer to Figure 13-3.Which of the following statements describes the best course of action for the firm depicted in the diagram?

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

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

Both monopolistically competitive firms and perfectly competitive firms maximize profits

Table 13-1 Table 13-1 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-1.At Victoria's profit-maximizing output

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

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