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

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

________ describes the actions a firm takes to maintain the differentiation of its product over time.

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

For a downward-sloping demand curve,marginal revenue decreases as quantity sold increases.

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

Being the first to sell a particular good can give a firm advantages over other firms that sell similar products.What is the name given to these advantages?

What is the difference between zero accounting profit and zero economic profit?

Assume price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19,then to maximize profits the firm should

Assuming that the total market size remains constant,a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because

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

Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

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?

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

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,

Figure 13-17 -Refer to Figure 13-17.What is the productively efficient output for the firm represented in the diagram?

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?

Only one of the following statements is correct.The statements compare perfectly competitive (PC)markets and monopolistically competitive (MC)markets.Which statement is correct?

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market.An example that has been used to illustrate this is