Question 1

Both monopolistically competitive firms and perfectly competitive firms maximize profits

Accepted Answer

A)  by producing where price equals average total cost. 
B)  by producing where marginal revenue equals average revenue. 
C)  by producing where marginal revenue is equal to marginal cost. 
D)  by producing where price equals average variable cost. 
A)  by producing where price equals average total cost. 
B)  by producing where marginal revenue equals average revenue. 
C)  by producing where marginal revenue is equal to marginal cost. 
D)  by producing where price equals average variable cost.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is true?

Accepted Answer

A)  Input prices are one of the success factors that firms can control. 
B)  Consumers will buy a product only if its price is below that of its competitors. 
C)  Consumers will buy a product only if it meets a need not met by competing products. 
D)  Sheer chance can play a significant role in the success or failure of a business. 
A)  Input prices are one of the success factors that firms can control. 
B)  Consumers will buy a product only if its price is below that of its competitors. 
C)  Consumers will buy a product only if it meets a need not met by competing products. 
D)  Sheer chance can play a significant role in the success or failure of a business.

Question 4

Which of the following characteristics is common to monopolistic competition and perfect competition?

Accepted Answer

A)  Firms produce identical products. 
B)  Entry barriers into the industry are low. 
C)  Each firm faces a downward -sloping demand curve. 
D)  Firms take market prices as given. 
A)  Firms produce identical products. 
B)  Entry barriers into the industry are low. 
C)  Each firm faces a downward -sloping demand curve. 
D)  Firms take market prices as given.

Question 5

Complete the following table.

Accepted Answer

The answer of Complete the following table.
  ...

Question 6

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

Accepted Answer

A)  impossible. 
B)  very difficult. 
C)  fairly easy. 
D)  almost always guaranteed. 
A)  impossible. 
B)  very difficult. 
C)  fairly easy. 
D)  almost always guaranteed.

Question 7

Figure 13-14   Figure 13-14 illustrates a monopolistically competitive firm.
-Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q0 to Q1.Why wouldn't a firm expand its output to Q1?

Accepted Answer

A)  The firm wants to maximize accounting profit rather than economic profit. 
B)  The firm would suffer an economic loss at Q1 while it would break even at Q0. 
C)  The firm's marginal revenue would be negative at Q1. 
D)  Demand is not sufficient for consumers to buy Q1. 
A)  The firm wants to maximize accounting profit rather than economic profit. 
B)  The firm would suffer an economic loss at Q1 while it would break even at Q0. 
C)  The firm's marginal revenue would be negative at Q1. 
D)  Demand is not sufficient for consumers to buy Q1.

Question 8

Figure 13-9  
-Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel C 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel A and Panel C

Question 9

The key characteristics of a monopolistically competitive market structure include

Accepted Answer

A)  many small (relative to the total market) sellers acting independently. 
B)  all sellers sell a homogeneous product. 
C)  barriers to entry are strong. 
D)  sellers have no incentive to advertise their products. 
A)  many small (relative to the total market) sellers acting independently. 
B)  all sellers sell a homogeneous product. 
C)  barriers to entry are strong. 
D)  sellers have no incentive to advertise their products.

Question 10

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?

Accepted Answer

A)  $0 (because its optimal output =0) 
B)  $15 
C)  $14.75 
D)  $29 
A)  $0 (because its optimal output =0) 
B)  $15 
C)  $14.75 
D)  $29

Question 11

In both monopolistically competitive and perfectly competitive industries

Accepted Answer

A)  firms produce products for which there are no close substitutes. 
B)  there are high barriers to entry. 
C)  there are many buyers and sellers. 
D)  firms are price takers. 
A)  firms produce products for which there are no close substitutes. 
B)  there are high barriers to entry. 
C)  there are many buyers and sellers. 
D)  firms are price takers.

Question 12

Table 13-3
   Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What are the profit-maximizing/loss-minimizing output level and price?

Accepted Answer

A)  Q=0 (firm should not produce) 
B)  Q=3; P=$18 
C)  Q=4; P=$17 
D)  Q=5; P=$16 
A)  Q=0 (firm should not produce) 
B)  Q=3; P=$18 
C)  Q=4; P=$17 
D)  Q=5; P=$16

Question 13

If a typical monopolistically competitive firm is making 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 14

Table 13-3
   Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.If this firm continues to produce,what is likely to happen to the product's price in the long run?

Accepted Answer

A)  It will fall. 
B)  It will increase 
C)  It will remain constant. 
D)  It cannot be determined without information on its long run demand curve. 
A)  It will fall. 
B)  It will increase 
C)  It will remain constant. 
D)  It cannot be determined without information on its long run demand curve.

Question 15

In theory,in the long run,monopolistically competitive firms earns zero profits.However,in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

Accepted Answer

A)  gradually increase the mark up on the goods produced 
B)  lower the price of its products to expand its market share 
C)  identify new markets and develop products precisely for those markets 
D)  find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment 
A)  gradually increase the mark up on the goods produced 
B)  lower the price of its products to expand its market share 
C)  identify new markets and develop products precisely for those markets 
D)  find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment

Question 16

Figure 13-18  
-Refer to Figure 13-18.The diagram demonstrates that

Accepted Answer

A)  in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa. 
B)  it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation. 
C)  it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa. 
D)  in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing. 
A)  in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa. 
B)  it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation. 
C)  it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa. 
D)  in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing.

Question 17

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

Accepted Answer

A) True 
 B)False

Question 18

When a monopolistically competitive firm breaks even in the long run,this is equivalent to earning a zero accounting profit.

Accepted Answer

A) True 
 B)False

Question 19

Figure 13-1  
-Refer to Figure 13-1.The marginal revenue from the increase in price from P0 to P1 equals

Accepted Answer

A) the area A. 
B) the area (B + D - 
A) . 
C) the area (A - 
D) . 
D) the area (C - 
B) . 
A) the area A. 
B) the area (B + D - 
A) . 
C) the area (A - 
D) . 
D) the area (C - 
B) .

Question 20

Table 13-3
   Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 13-3.What is the amount of the firm's loss at its optimal output level?

Accepted Answer

A)  $0 
B)  $41 
C)  $45 
D)  $50 
A)  $0 
B)  $41 
C)  $45 
D)  $50

Both monopolistically competitive firms and perfectly competitive firms maximize profits

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?

Which of the following characteristics is common to monopolistic competition and perfect competition?

Complete the following table.

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

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q₀ to Q₁.Why wouldn't a firm expand its output to Q₁?

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

The key characteristics of a monopolistically competitive market structure include

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?

In both monopolistically competitive and perfectly competitive industries

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What are the profit-maximizing/loss-minimizing output level and price?

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

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.If this firm continues to produce,what is likely to happen to the product's price in the long run?

In theory,in the long run,monopolistically competitive firms earns zero profits.However,in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

Figure 13-18 -Refer to Figure 13-18.The diagram demonstrates that

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

When a monopolistically competitive firm breaks even in the long run,this is equivalent to earning a zero accounting profit.

Figure 13-1 -Refer to Figure 13-1.The marginal revenue from the increase in price from P₀ to P₁ equals

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What is the amount of the firm's loss at its optimal output level?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

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

Both monopolistically competitive firms and perfectly competitive firms maximize profits

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?

Which of the following characteristics is common to monopolistic competition and perfect competition?

Complete the following table.

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

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q0 to Q1.Why wouldn't a firm expand its output to Q1?

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

The key characteristics of a monopolistically competitive market structure include

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?

In both monopolistically competitive and perfectly competitive industries

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What are the profit-maximizing/loss-minimizing output level and price?

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

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.If this firm continues to produce,what is likely to happen to the product's price in the long run?

In theory,in the long run,monopolistically competitive firms earns zero profits.However,in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

Figure 13-18 -Refer to Figure 13-18.The diagram demonstrates that

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

When a monopolistically competitive firm breaks even in the long run,this is equivalent to earning a zero accounting profit.

Figure 13-1 -Refer to Figure 13-1.The marginal revenue from the increase in price from P0 to P1 equals

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What is the amount of the firm's loss at its optimal output level?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Figure 13-14 Figure 13-14 illustrates a monopolistically competitive firm. -Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q₀ to Q₁.Why wouldn't a firm expand its output to Q₁?

Figure 13-1 -Refer to Figure 13-1.The marginal revenue from the increase in price from P₀ to P₁ equals