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

If buyers of a monopolistically competitive product feel the products of different sellers are strongly differentiated, then the demand for each seller's product is

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

Figure 13-4 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4. If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged?

What are the key factors that determine the profitability of a firm in a monopolistically competitive market?

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

Why are demand and marginal revenue represented by the same curve for a firm in a perfectly competitive market, but by separate curves for a firm in a monopolistically competitive market?

The marginal revenue of a monopolistically competitive firm

A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

Brand management refers to

Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?

Monopolistically competitive firms face a perfectly elastic demand curve.

In the United States, the average person mostly patronizes firms that operate in

Monopolistically competitive firms have downward-sloping demand curves. In the long run, monopolistically competitive firms earn zero economic profits. These two characteristics imply that in the long run,

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

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

Figure 13-11 -Refer to Figure 13-11. The firm represented in the diagram

In the long-run equilibrium, a monopolistically competitive firm earning normal profit produces the allocatively efficient output level.

If a monopolistically competitive firm breaks even, the firm is earning as much in this industry as it could in any other comparable industry.

For allocative efficiency to hold,