Question 1

Economists agree that a monopolistically competitive market structure

Accepted Answer

A)  lowers consumer utility because consumers pay a price higher than the marginal cost of production. 
B)  is detrimental to society because it leads to a waste of scarce resources. 
C)  benefits consumers because firms produce products that appeal to a wide range of consumer tastes. 
D)  can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products. 
A)  lowers consumer utility because consumers pay a price higher than the marginal cost of production. 
B)  is detrimental to society because it leads to a waste of scarce resources. 
C)  benefits consumers because firms produce products that appeal to a wide range of consumer tastes. 
D)  can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products.

Question 2

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

Accepted Answer

A)  it has more locations than Best Buy. 
B)  its marginal revenue is lower than Best Buy's. 
C)  the demand for its goods is higher than Best Buy's. 
D)  it sells the quantity associated with its minimum average total cost. 
A)  it has more locations than Best Buy. 
B)  its marginal revenue is lower than Best Buy's. 
C)  the demand for its goods is higher than Best Buy's. 
D)  it sells the quantity associated with its minimum average total cost.

Question 3

Firms in monopolistic competition compete by selling similar,but not identical products.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the Article Summary.By marketing to the LGBT community,Fort Lauderdale and the CVB are trying to set the city apart from competing travel destinations.This is an example of

Accepted Answer

A)  defending a brand name. 
B)  blocking entry into the market. 
C)  legally enforcing a trademark. 
D)  product differentiation. 
A)  defending a brand name. 
B)  blocking entry into the market. 
C)  legally enforcing a trademark. 
D)  product differentiation.

Question 5

Table 13-5
   Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags.
-Refer to Table 13-5.At the profit-maximizing or loss-minimizing output level

Accepted Answer

A)  the firm makes a profit of $12. 
B)  the firm incurs a loss equal to its fixed cost. 
C)  the firm makes a profit of $16. 
D)  the firm incurs a loss of $14. 
A)  the firm makes a profit of $12. 
B)  the firm incurs a loss equal to its fixed cost. 
C)  the firm makes a profit of $16. 
D)  the firm incurs a loss of $14.

Question 6

Figure 13-9  
-Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Accepted Answer

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

Question 7

For allocative efficiency to hold

Accepted Answer

A)  price must equal marginal revenue of the last unit sold. 
B)  price must equal the marginal cost of the last unit produced. 
C)  average variable cost is minimized in production. 
D)  average total cost is minimized in production. 
A)  price must equal marginal revenue of the last unit sold. 
B)  price must equal the marginal cost of the last unit produced. 
C)  average variable cost is minimized in production. 
D)  average total cost is minimized in production.

Question 8

Figure 13-17  
-Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Accepted Answer

A)  Its average cost of production will fall and its profit will rise. 
B)  It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C)  It will move from a zero profit situation to a profit situation 
D)  It will move from a zero profit situation to a loss situation 
A)  Its average cost of production will fall and its profit will rise. 
B)  It will be taking advantage of economies of scale and will be able to lower the price of its product. 
C)  It will move from a zero profit situation to a profit situation 
D)  It will move from a zero profit situation to a loss situation

Question 9

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 best course of action for the firm in the short run?

Accepted Answer

A)  It should shut down. 
B)  It should stay in business because it covers some of its fixed cost. 
C)  It should increase its sales by lowering its price. 
D)  It should not cut its price but it should increase its sales by advertising. 
A)  It should shut down. 
B)  It should stay in business because it covers some of its fixed cost. 
C)  It should increase its sales by lowering its price. 
D)  It should not cut its price but it should increase its sales by advertising.

Question 10

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?

Accepted Answer

A)  $275 
B)  $145 
C)  $35 
D)  $20 
A)  $275 
B)  $145 
C)  $35 
D)  $20

Question 11

Figure 13-2  
-Refer to Figure 13-2.The marginal revenue from selling the additional unit Qb instead of Qa equals

Accepted Answer

A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G. 
A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G.

Question 12

For the monopolistically competitive firm

Accepted Answer

A)  Price (P) = Marginal Revenue (MR) = Average Revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR. 
A)  Price (P) = Marginal Revenue (MR) = Average Revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR.

Question 13

One way by which firms differentiate their products is to find a market niche.

Accepted Answer

A) True 
 B)False

Question 14

When a monopolistically competitive firm lowers its price,one good thing happens to the firm.What is this "one good thing" called?

Accepted Answer

A)  the output effect 
B)  the price effect 
C)  the income effect 
D)  the substitution effect 
A)  the output effect 
B)  the price effect 
C)  the income effect 
D)  the substitution effect

Question 15

Suppose electronic cigarette manufacturer NJOY is successful in establishing a profitable market for e-cigarettes in what is a monopolistically competitive industry.In the long run,NJOY will most likely find it ________ to remain profitable as they face ________ competition in the e-cigarette market.

Accepted Answer

A)  harder; more 
B)  harder; less 
C)  easier; more 
D)  easier; less 
A)  harder; more 
B)  harder; less 
C)  easier; more 
D)  easier; less

Question 16

Figure 13-12   Figure 13-12 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 13-12.If the diagram represents a typical firm in the designer watch market,what is likely to happen in the long run?

Accepted Answer

A)  Some firms will exit the market causing the demand to increase for firms remaining in the market. 
B)  The firms that are making losses will be purchased by their more successful rivals. 
C)  Inefficient firms will exit the market and new cost efficient firms will enter the market. 
D)  Firms will have to raise their prices to cover costs of production. 
A)  Some firms will exit the market causing the demand to increase for firms remaining in the market. 
B)  The firms that are making losses will be purchased by their more successful rivals. 
C)  Inefficient firms will exit the market and new cost efficient firms will enter the market. 
D)  Firms will have to raise their prices to cover costs of production.

Question 17

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

Accepted Answer

A)  it makes a profit. 
B)  its marginal profit is maximized. 
C)  its total revenue exceeds its fixed cost. 
D)  its total revenue covers its variable cost. 
A)  it makes a profit. 
B)  its marginal profit is maximized. 
C)  its total revenue exceeds its fixed cost. 
D)  its total revenue covers its variable cost.

Question 18

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

Accepted Answer

A)  earn a profit of $176. 
B)  break even. 
C)  earn a profit of $88. 
D)  earn a profit of $60. 
A)  earn a profit of $176. 
B)  break even. 
C)  earn a profit of $88. 
D)  earn a profit of $60.

Question 19

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

Accepted Answer

A)  because firms produce differentiated products 
B)  because the lack of entry barriers would compete away profits 
C)  because firms do not produce at their minimum efficient scale 
D)  because the total market is not large enough to accommodate so many firms 
A)  because firms produce differentiated products 
B)  because the lack of entry barriers would compete away profits 
C)  because firms do not produce at their minimum efficient scale 
D)  because the total market is not large enough to accommodate so many firms

Question 20

Why are many companies concerned about brand management?

Accepted Answer

Firms are concerned about bran

Economists agree that a monopolistically competitive market structure

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

Firms in monopolistic competition compete by selling similar,but not identical products.

Refer to the Article Summary.By marketing to the LGBT community,Fort Lauderdale and the CVB are trying to set the city apart from competing travel destinations.This is an example of

Table 13-5 Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 13-5.At the profit-maximizing or loss-minimizing output level

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

For allocative efficiency to hold

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Q_f units.What happens if it increases its output to Q_gunits?

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 best course of action for the firm in the short run?

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 13-2 -Refer to Figure 13-2.The marginal revenue from selling the additional unit Q_b instead of Q_a equals

For the monopolistically competitive firm

One way by which firms differentiate their products is to find a market niche.

When a monopolistically competitive firm lowers its price,one good thing happens to the firm.What is this "one good thing" called?

Suppose electronic cigarette manufacturer NJOY is successful in establishing a profitable market for e-cigarettes in what is a monopolistically competitive industry.In the long run,NJOY will most likely find it to remain profitable as they face competition in the e-cigarette market.

Figure 13-12 Figure 13-12 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-12.If the diagram represents a typical firm in the designer watch market,what is likely to happen in the long run?

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

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?

Why are many companies concerned about brand management?

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

Economists agree that a monopolistically competitive market structure

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

Firms in monopolistic competition compete by selling similar,but not identical products.

Refer to the Article Summary.By marketing to the LGBT community,Fort Lauderdale and the CVB are trying to set the city apart from competing travel destinations.This is an example of

Table 13-5 Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 13-5.At the profit-maximizing or loss-minimizing output level

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

For allocative efficiency to hold

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

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 best course of action for the firm in the short run?

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 13-2 -Refer to Figure 13-2.The marginal revenue from selling the additional unit Qb instead of Qa equals

For the monopolistically competitive firm

One way by which firms differentiate their products is to find a market niche.

When a monopolistically competitive firm lowers its price,one good thing happens to the firm.What is this "one good thing" called?

Figure 13-12 Figure 13-12 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-12.If the diagram represents a typical firm in the designer watch market,what is likely to happen in the long run?

In the short run,a profit-maximizing firm's decision to produce should be guided by whether

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?

Why are many companies concerned about brand management?

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 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Q_f units.What happens if it increases its output to Q_gunits?

Figure 13-2 -Refer to Figure 13-2.The marginal revenue from selling the additional unit Q_b instead of Q_a equals