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

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 fixed cost of production?

If a firm has excess capacity,it means

A monopolistically competitive industry that earns economic profits in the short run will

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 is not a characteristic of monopolistic competition?

When a monopolistically competitive firm lowers it price one bad thing happens to the firm.What is this "one bad thing" called?

Every firm that has the ability to affect the price of the good or service it sells will

A monopolistically competitive firm will

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

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

In the long run,if price is less than average cost

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?

If a monopolistically competitive firm has excess capacity

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue,total cost is $1,674 and total revenue is $2,000,its average profit is

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

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?

Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets,firms

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 output (Q)that maximizes profit and what is the price (P)charged?

Figure 13-13 -Refer to Figure 13-13.If the diagram represents a typical firm in the market,what is likely to happen in the long run?

One of the assumptions of monopolistic competition is that firms produce differentiated products.What does this assumption imply about the demand curve facing a representative firm?