Question 1

Which of the following statements is true about monopolistically competitive firms?

Accepted Answer

A) Unlike perfectly competitive firms,monopolistically competitive firms are able to raise their prices without losing all of their customers. 
B) Like perfectly competitive firms,monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products. 
C) Like perfectly competitive firms,monopolistically competitive firms maximize their profits by settling price equal to marginal cost. 
D) Unlike perfectly competitive firms,monopolistically competitive face perfectly inelastic demand curves. 
A) Unlike perfectly competitive firms,monopolistically competitive firms are able to raise their prices without losing all of their customers. 
B) Like perfectly competitive firms,monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products. 
C) Like perfectly competitive firms,monopolistically competitive firms maximize their profits by settling price equal to marginal cost. 
D) Unlike perfectly competitive firms,monopolistically competitive face perfectly inelastic demand curves.

Question 2

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are

Accepted Answer

A) the establishment of trademarks for its products and the aggressive defense of those trademarks. 
B) lobbying government to erect or enforce entry barriers in its markets and the marketing of its products as widely as possible. 
C) the differentiation of its products and the production of products at a lower average cost than competing firms. 
D) the selection of the prices of its products and the selection of the most productive and loyal employees. 
A) the establishment of trademarks for its products and the aggressive defense of those trademarks. 
B) lobbying government to erect or enforce entry barriers in its markets and the marketing of its products as widely as possible. 
C) the differentiation of its products and the production of products at a lower average cost than competing firms. 
D) the selection of the prices of its products and the selection of the most productive and loyal employees.

Question 3

Figure 13-4   Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea.
-Refer to Figure 13-4.Based on the diagram,one can conclude that

Accepted Answer

A) some existing firms will exit the market. 
B) new firms will enter the market. 
C) the industry is in long-run equilibrium. 
D) firms achieve productive efficiency. 
A) some existing firms will exit the market. 
B) new firms will enter the market. 
C) the industry is in long-run equilibrium. 
D) firms achieve productive efficiency.

Question 4

Figure 13-4   Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea.
-Refer to Figure 13-4.What is the firm's profit-maximizing price?

Accepted Answer

A) $12 
B) $13 
C) $14 
D) $16 
A) $12 
B) $13 
C) $14 
D) $16

Question 5

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.Victoria's profit-maximizing output is where

Accepted Answer

A) total profit equals $3. 
B) marginal revenue and marginal cost both equal $4. 
C) marginal revenue and marginal cost both equal $3. 
D) marginal cost is at its minimum value. 
A) total profit equals $3. 
B) marginal revenue and marginal cost both equal $4. 
C) marginal revenue and marginal cost both equal $3. 
D) marginal cost is at its minimum value.

Question 6

Why would an organization as large as the National Football League (NFL)incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

Accepted Answer

The National Football League has spent a

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Accepted Answer

A) firms produce at the minimum point of their average cost curves. 
B) price equals marginal cost. 
C) firms break even. 
D) price equals marginal revenue. 
A) firms produce at the minimum point of their average cost curves. 
B) price equals marginal cost. 
C) firms break even. 
D) price equals marginal revenue.

Question 9

When a firm faces a downward-sloping demand curve,marginal revenue

Accepted Answer

A) must exceed price because the price effect outweighs the output effect. 
B) is less than price because a firm must lower its price to sell more. 
C) equals price because the firm sells a standardized product. 
D) must exceed price because the output effect outweighs the price effect. 
A) must exceed price because the price effect outweighs the output effect. 
B) is less than price because a firm must lower its price to sell more. 
C) equals price because the firm sells a standardized product. 
D) must exceed price because the output effect outweighs the price effect.

Question 10

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Accepted Answer

A) $1,188. 
B) $1,092.30. 
C) $95.70. 
D) $1.45. 
A) $1,188. 
B) $1,092.30. 
C) $95.70. 
D) $1.45.

Question 11

Which of the following can a firm use to defend a successful product's brand name?

Accepted Answer

A) The firm can obtain a patent on the brand name. 
B) The firm can apply for a trademark to ban other firm's from using the product's name. 
C) The firm can increase the amount it spends on advertising for the product. 
D) The firm can attempt to copyright the brand name. 
A) The firm can obtain a patent on the brand name. 
B) The firm can apply for a trademark to ban other firm's from using the product's name. 
C) The firm can increase the amount it spends on advertising for the product. 
D) The firm can attempt to copyright the brand name.

Question 12

In the long run firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits,but unlike perfectly competitive firms in the long run,monopolistically competitive firms

Accepted Answer

A) charge a price that is greater than average revenue. 
B) charge a price that is equal to marginal cost. 
C) do not produce at minimum average total cost. 
D) charge a price that is equal to average total cost. 
A) charge a price that is greater than average revenue. 
B) charge a price that is equal to marginal cost. 
C) do not produce at minimum average total cost. 
D) charge a price that is equal to average total cost.

Question 13

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

Accepted Answer

A) few barriers to entry 
B) significant barriers to entry 
C) blocked entry 
D) no barriers to entry 
A) few barriers to entry 
B) significant barriers to entry 
C) blocked entry 
D) no barriers to entry

Question 14

Suppose that if a local McDonald's restaurant reduces the price of a Big Mac from $4.00 to $3.25,the number of Big Macs it sells per day will increase from 4 to 5.Explain the output effect and the price effect resulting from this change.Using a graph,illustrate both the loss in revenue from selling each of the first 4 Big Macs for $0.75 less and the additional revenue from selling 1 more Big Mac.What is the total change in revenue received which results from this price decrease?

Accepted Answer

The 1 extra Big Mac sold is the output e

Question 15

Which of the following statements is true?

Accepted Answer

A) The marginal revenue of a monopolistically competitive firm will be positive at high prices and negative at low prices. 
B) Because the demand curve for a monopolistically competitive firm is downward-sloping its marginal revenue will be negative. 
C) The marginal revenue of a monopolistically competitive firm will be always be positive. 
D) The marginal revenue of a monopolistically competitive firm will be positive at low prices and negative at high prices. 
A) The marginal revenue of a monopolistically competitive firm will be positive at high prices and negative at low prices. 
B) Because the demand curve for a monopolistically competitive firm is downward-sloping its marginal revenue will be negative. 
C) The marginal revenue of a monopolistically competitive firm will be always be positive. 
D) The marginal revenue of a monopolistically competitive firm will be positive at low prices and negative at high prices.

Question 16

Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A) P = ATC and MR = MC. 
B) P = ATC and P = MC. 
C) P > ATC and P > MR. 
D) P > MR and MC = ATC. 
A) P = ATC and MR = MC. 
B) P = ATC and P = MC. 
C) P > ATC and P > MR. 
D) P > MR and MC = ATC.

Question 17

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

Accepted Answer

A) The firm's demand curve will shift to the right if it stays in business in the long run. 
B) The firm will exit the industry if it continues to suffer economic losses. 
C) The firm will break even if its stays in business in the long run. 
D) In the long run the firm will be able to charge a price that is greater than its average total cost. 
A) The firm's demand curve will shift to the right if it stays in business in the long run. 
B) The firm will exit the industry if it continues to suffer economic losses. 
C) The firm will break even if its stays in business in the long run. 
D) In the long run the firm will be able to charge a price that is greater than its average total cost.

Question 18

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

Accepted Answer

The owner or manager of a firm that has

Question 19

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

Accepted Answer

A) higher; lower 
B) lower; lower 
C) lower; higher 
D) higher; higher 
A) higher; lower 
B) lower; lower 
C) lower; higher 
D) higher; higher

Question 20

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 are less efficient than perfectly competitive markets?

Accepted Answer

A) In contrast to perfectly competitive markets,neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets. 
B) In contrast to perfectly competitive markets,firms in monopolistically competitive markets earn economic profits in long-run equilibrium. 
C) In contrast to perfectly competitive markets,firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium. 
D) In contrast to perfectly competitive markets,firms in monopolistically competitive markets can charge a price greater than average total cost in the short run. 
A) In contrast to perfectly competitive markets,neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets. 
B) In contrast to perfectly competitive markets,firms in monopolistically competitive markets earn economic profits in long-run equilibrium. 
C) In contrast to perfectly competitive markets,firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium. 
D) In contrast to perfectly competitive markets,firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.

Which of the following statements is true about monopolistically competitive firms?

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are

Figure 13-4 Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 13-4.Based on the diagram,one can conclude that

Figure 13-4 Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 13-4.What is the firm's profit-maximizing price?

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.Victoria's profit-maximizing output is where

Why would an organization as large as the National Football League (NFL)incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

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

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

When a firm faces a downward-sloping demand curve,marginal revenue

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Which of the following can a firm use to defend a successful product's brand name?

In the long run firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits,but unlike perfectly competitive firms in the long run,monopolistically competitive firms

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

Which of the following statements is true?

Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a level of output and charges a price.

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 statements is true about monopolistically competitive firms?

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are

Figure 13-4 Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 13-4.Based on the diagram,one can conclude that

Figure 13-4 Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 13-4.What is the firm's profit-maximizing price?

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.Victoria's profit-maximizing output is where

Why would an organization as large as the National Football League (NFL)incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

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

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

When a firm faces a downward-sloping demand curve,marginal revenue

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

Which of the following can a firm use to defend a successful product's brand name?

In the long run firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits,but unlike perfectly competitive firms in the long run,monopolistically competitive firms

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

Which of the following statements is true?

Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

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

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a level of output and charges a price.