Question 1

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

Accepted Answer

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

Question 2

In monopolistic competition there is/are

Accepted Answer

A) many sellers who each face a downward-sloping demand curve. 
B) a few sellers who each face a downward-sloping demand curve. 
C) only one seller who faces a downward-sloping demand curve. 
D) many sellers who each face a perfectly elastic demand curve. 
A) many sellers who each face a downward-sloping demand curve. 
B) a few sellers who each face a downward-sloping demand curve. 
C) only one seller who faces a downward-sloping demand curve. 
D) many sellers who each face a perfectly elastic demand curve.

Question 3

Why are many companies concerned about brand management?

Accepted Answer

Firms are concerned about bran

Question 4

Table 10-2
   Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 10-2 shows the firm's demand and cost schedules.
-Refer to Table 10-2.What is the marginal profit from producing and selling the 5th case?

Accepted Answer

A) $275 
B) $145 
C) $35 
D) $20 
A) $275 
B) $145 
C) $35 
D) $20

Question 5

A monopolistically competitive firm faces a downward-sloping demand curve because

Accepted Answer

A) it is able to control price and quantity demanded. 
B) there are few substitutes for its product. 
C) of product differentiation. 
D) its market decisions are affected by the decisions of its rivals. 
A) it is able to control price and quantity demanded. 
B) there are few substitutes for its product. 
C) of product differentiation. 
D) its market decisions are affected by the decisions of its rivals.

Question 6

If a typical monopolistically competitive firm is incurring short-run losses,then

Accepted Answer

A) other more competitive firms will enter the market. 
B) as some firms leave,the remaining firms will experience an increase in the demand for their products. 
C) as some firms leave,the demand for the products of the remaining firms will become more elastic. 
D) the industry will eventually cease to exist. 
A) other more competitive firms will enter the market. 
B) as some firms leave,the remaining firms will experience an increase in the demand for their products. 
C) as some firms leave,the demand for the products of the remaining firms will become more elastic. 
D) the industry will eventually cease to exist.

Question 7

Compared to a perfectly competitive firm,the demand curve facing a monopolistically competitive firm is

Accepted Answer

A) more elastic because there are many close substitutes for the product of a monopolistically competitive firm. 
B) less elastic because monopolistically competitive firms produce similar,but not identical,products. 
C) just as elastic because there are many sellers in both markets. 
D) more elastic because in the long run,the demand curve is tangent to the firm's average total cost curve. 
A) more elastic because there are many close substitutes for the product of a monopolistically competitive firm. 
B) less elastic because monopolistically competitive firms produce similar,but not identical,products. 
C) just as elastic because there are many sellers in both markets. 
D) more elastic because in the long run,the demand curve is tangent to the firm's average total cost curve.

Question 8

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

Accepted Answer

A) $326. 
B) $40. 
C) $6.52. 
D) impossible to determine without additional information. 
A) $326. 
B) $40. 
C) $6.52. 
D) impossible to determine without additional information.

Question 9

Monopolistically competitive firms can differentiate their products

Accepted Answer

A) by producing at minimum efficient scale. 
B) by producing where marginal revenue equals marginal cost. 
C) by equating price and average total cost. 
D) through marketing. 
A) by producing at minimum efficient scale. 
B) by producing where marginal revenue equals marginal cost. 
C) by equating price and average total cost. 
D) through marketing.

Question 10

What is the profit-maximising rule for a monopolistically competitive firm?

Accepted Answer

A) to produce a quantity that maximises market share 
B) to produce a quantity that maximises total revenue 
C) to produce a quantity such that marginal revenue equals marginal cost 
D) to produce a quantity such that price equals marginal cost 
A) to produce a quantity that maximises market share 
B) to produce a quantity that maximises total revenue 
C) to produce a quantity such that marginal revenue equals marginal cost 
D) to produce a quantity such that price equals marginal cost

Question 11

For productive efficiency to hold,

Accepted Answer

A) price must equal the marginal cost of the last unit produced. 
B) price must equal marginal revenue of the last unit sold. 
C) average variable cost is minimised in production. 
D) average total cost is minimised in production. 
A) price must equal the marginal cost of the last unit produced. 
B) price must equal marginal revenue of the last unit sold. 
C) average variable cost is minimised in production. 
D) average total cost is minimised in production.

Question 12

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

Accepted Answer

A) Some firms will exit the market causing the demand to increase for firms remaining in the market. 
B) New firms will enter the market causing the demand to decrease for existing firms. 
C) Inefficient firms will exit the market and new cost-efficient firms will enter the market. 
D) Competition will be intensified as firms strive to make long-run profits. 
A) Some firms will exit the market causing the demand to increase for firms remaining in the market. 
B) New firms will enter the market causing the demand to decrease for existing firms. 
C) Inefficient firms will exit the market and new cost-efficient firms will enter the market. 
D) Competition will be intensified as firms strive to make long-run profits.

Question 13

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 14

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?

Accepted Answer

A) In the short run,the firm's demand curve will lie above its ATC curve.The demand curve will be tangent to the ATC curve in the long run. 
B) In the short run,the firm's demand curve will lie below its ATC curve.The demand curve will be tangent to the ATC curve in the long run. 
C) In the short run,the firm's demand curve will cross its ATC curve at the ATC curve's lowest point.The demand curve will be above the ATC curve in the long run. 
D) In the short run,the firm's ATC curve will cross the demand curve at the profit maximising level of output.The demand curve will be tangent to the ATC curve in the long run. 
A) In the short run,the firm's demand curve will lie above its ATC curve.The demand curve will be tangent to the ATC curve in the long run. 
B) In the short run,the firm's demand curve will lie below its ATC curve.The demand curve will be tangent to the ATC curve in the long run. 
C) In the short run,the firm's demand curve will cross its ATC curve at the ATC curve's lowest point.The demand curve will be above the ATC curve in the long run. 
D) In the short run,the firm's ATC curve will cross the demand curve at the profit maximising level of output.The demand curve will be tangent to the ATC curve in the long run.

Question 15

When a credit card company offers different services with its card,like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card,the credit card company is trying to

Accepted Answer

A) create a barrier to entry for competing firms. 
B) create a perfectly competitive market in which to sell its credit card. 
C) convince customers that its card has greater value than those offered by rival firms. 
D) shift the demand curve for competing firms to the right. 
A) create a barrier to entry for competing firms. 
B) create a perfectly competitive market in which to sell its credit card. 
C) convince customers that its card has greater value than those offered by rival firms. 
D) shift the demand curve for competing firms to the right.

Question 16

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 17

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 18

Firms in monopolistic competition compete by selling similar,but not identical products.

Accepted Answer

A) True 
 B)False

Question 19

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Accepted Answer

A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked. 
A) barriers to entry are very low. 
B) there are many firms in the market. 
C) products are differentiated. 
D) entry into the market is blocked.

Question 20

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

Accepted Answer

A) Q = 3;P = $7. 
B) Q = 4;P = $6. 
C) Q = 5;P = $5. 
D) Q = 6;P = $4. 
A) Q = 3;P = $7. 
B) Q = 4;P = $6. 
C) Q = 5;P = $5. 
D) Q = 6;P = $4.

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

In monopolistic competition there is/are

Why are many companies concerned about brand management?

Table 10-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 10-2 shows the firm's demand and cost schedules. -Refer to Table 10-2.What is the marginal profit from producing and selling the 5th case?

A monopolistically competitive firm faces a downward-sloping demand curve because

If a typical monopolistically competitive firm is incurring short-run losses,then

Compared to a perfectly competitive firm,the demand curve facing a monopolistically competitive firm is

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

Monopolistically competitive firms can differentiate their products

What is the profit-maximising rule for a monopolistically competitive firm?

For productive efficiency to hold,

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

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

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 credit card company offers different services with its card,like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card,the credit card company is trying to

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

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

Firms in monopolistic competition compete by selling similar,but not identical products.

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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Exam 10: Monopolistic Competition

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

In monopolistic competition there is/are

Why are many companies concerned about brand management?

Table 10-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 10-2 shows the firm's demand and cost schedules. -Refer to Table 10-2.What is the marginal profit from producing and selling the 5th case?

A monopolistically competitive firm faces a downward-sloping demand curve because

If a typical monopolistically competitive firm is incurring short-run losses,then

Compared to a perfectly competitive firm,the demand curve facing a monopolistically competitive firm is

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

Monopolistically competitive firms can differentiate their products

What is the profit-maximising rule for a monopolistically competitive firm?

For productive efficiency to hold,

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

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

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 credit card company offers different services with its card,like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card,the credit card company is trying to

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

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

Firms in monopolistic competition compete by selling similar,but not identical products.

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Oligopoly: Firms in Less Competitive Markets

The Markets for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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