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

Table 13-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules. -Refer to Table 13-2. What is the marginal profit from producing and selling the 5th case?

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. What is the area that represents the total revenue made by the firm?

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

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced-tea. -Refer to Figure 13-8. At the profit-maximizing output level the firm will

Why do most firms in monopolistic competition typically make zero profit in the long run?

A monopolistically competitive firm chooses

The financial situation at Starbucks in the late 2000s illustrates the fact that maintaining long-run profits in a monopolistically competitive market is

Table 13-4 Table 13-4 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 13-4. Based on the data in the table, which of the following statements is true?

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. Should the firm represented in the diagram continue to stay in business despite its losses?

Figure 13-16 -Refer to Figure 13-16. Figure 13-16 depicts a monopolistically competitive barber shop. Use the diagram to answer the following questions. a. Suppose the average variable cost of production is $15 when output equals 110 haircuts and $15.25 when output equals 140 haircuts. If the firm wants to maximize its profit or minimize its losses, how many haircuts will it produce and what price should it charge? Explain your answer. b. Calculate the firm's profit or loss. c. What is likely to happen in this industry over time as it moves to its new long-run equilibrium? d. Suppose the barber shop depicted in the diagram remains in the industry. Is this barber shop likely to produce this same quantity of haircuts as in part (a) in the long run?

How would a marketing campaign directed at single women improve the chances of success at a place like a cigar bar?

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

The marketing of the first ballpoint by Milton Reynolds showed

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3. What is its average variable cost of production at its optimal output level?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the

What effect does the entry of new firms in a monopolistically competitive market have on the economic profits of existing firms in the market? How might existing firms attempt to counteract this effect?

Table 13-1 -Refer to Table 13-1. What is the marginal revenue of the 3rd unit?

Figure 13-13 -Refer to Figure 13-13. What is the output price?

A monopolistically competitive firm maximizes profit where

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm. Illustrate your answer with a graph demonstrating the long run equilibrium for the two types of firms.