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

A trademark is

Monopolistic competition is a market structure in which

Article Summary As a part of its 2013 marketing campaign, the Greater Fort Lauderdale Convention & Visitors Bureau (CVB) set its sights on increasing travel to the region by with promotions to the lesbian, gay, bisexual and transgender community (LGBT). From August through November, the CVB has events scheduled across the United States and globally in an effort to attract a larger share of this travel segment. According to the CVB, Fort Lauderdale is the state's largest and most popular diverse gay capital, and their marketing efforts helped attract 1.2 million LGBT tourists who spent $1.4 billion in 2012. Source: Arlene Satchell, "Lauderdale CVB ramps up LGBT summer marketing," Sun Sentinel, June 29, 2013. -Refer to the Article Summary. By marketing to the LGBT community, Fort Lauderdale and the CVB are trying to set the city apart from competing travel destinations. This is an example of

Juicy Couture has been successful in selling women's clothing using an unusual strategy. According to an article in the Wall Street Journal, the key to the firm's strategy is to "limit distribution to maintain the brand's exclusive cachet, even if that means sacrificing sales, a brand-management technique once used only for high-end luxury brands." In 2006, Juicy clothes were sold in only four department stores: Neiman Marcus, Saks, Bloomingdale's, and Nordstrom. In 2006, its sales have more than quadrupled since 2002. Source: Rachel Dodes, "From Track Suits to Fast Track," Wall Street Journal, September 13, 2006. How does limiting the number of stores in which Juicy's products are sold contribute to its success?

Table 13-1 -Refer to Table 13-1. What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

Starbucks started out small in 1971, but by 1993 Starbucks was a national chain and had coffeehouses in 38 countries. A key to the company's success was the realization by executives that

In a monopolistically competitive market, a successful new restaurant

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?

Table 13-5 Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 13-5. At the profit-maximizing or loss-minimizing output level,

For a profit-maximizing monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Figure 13-3 -Refer to Figure 13-3. The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit. Based on the diagram in the figure,

Which of the following is an example of a factor that a firm's owners and managers can control in making the firm successful?

Figure 13-11 -Refer to Figure 13-11. What is the amount of excess capacity?

A successful trademark is one that becomes a generic name for a product, for example, "Kleenex" has become a generic term for tissues.

Which of the following statements is true?

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

Firms such as Caribou Coffee and Diedrich Coffee operate hundreds of coffeehouses nationwide while firms such as Dunn Brothers Coffee operate only in four states. How would you characterize these stores?

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

If a monopolistically competitive firm lowers its price and, as a result, its total revenue decreases then

If firms in a monopolistically competitive industry are making profits in the short run,