Question 1

Monopolistically competitive firms can differentiate their products

Accepted Answer

A)  by producing at minimum efficient scale. 
B)  by producing where marginal revenue equals marginal cost. 
C)  by equating price and average total cost. 
D)  through marketing. 
A)  by producing at minimum efficient scale. 
B)  by producing where marginal revenue equals marginal cost. 
C)  by equating price and average total cost. 
D)  through marketing.

Question 2

For productive efficiency to hold

Accepted Answer

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

Question 3

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?

Accepted Answer

A)  0P0aQa 
B)  0P1bQa 
C)  0P2cQa 
D)  0P3dQa 
A)  0P0aQa 
B)  0P1bQa 
C)  0P2cQa 
D)  0P3dQa

Question 4

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Accepted Answer

In both perfectly competitive and monopo

Question 5

Figure 13-13  
-Refer to Figure 13-13.What is the area that represents the firm's profit?

Accepted Answer

A)  profit = 0 
B)  P4edP2 
C)  P4eaP1 
D)  P3baP2 
A)  profit = 0 
B)  P4edP2 
C)  P4eaP1 
D)  P3baP2

Question 6

Figure 13-6  
-After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

Accepted Answer

A)  Tony's business earns a short-run economic profit. 
B)  Tony should shut down his business temporarily. 
C)  Tony's profit fell after selling his 1,000th three-ring binder. 
D)  Tony's profit would be greater if he sold an additional three-ring binder. 
A)  Tony's business earns a short-run economic profit. 
B)  Tony should shut down his business temporarily. 
C)  Tony's profit fell after selling his 1,000th three-ring binder. 
D)  Tony's profit would be greater if he sold an additional three-ring binder.

Question 7

One reason Starbucks experienced a decline in sales in the late 2000s is because

Accepted Answer

A)  the product they offered was becoming less differentiated from their competitors' products. 
B)  the coffeehouse market transitioned from being monopolistically competitive to perfectly competitive. 
C)  barriers to entry became more restrictive in the coffeehouse market. 
D)  the number of competitors in the market declined dramatically. 
A)  the product they offered was becoming less differentiated from their competitors' products. 
B)  the coffeehouse market transitioned from being monopolistically competitive to perfectly competitive. 
C)  barriers to entry became more restrictive in the coffeehouse market. 
D)  the number of competitors in the market declined dramatically.

Question 8

If a significant number of smokers switch from smoking tobacco cigarettes to e-cigarettes,a company like NJOY will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.

Accepted Answer

A)  right; right 
B)  right; left 
C)  left; right 
D)  left; left 
A)  right; right 
B)  right; left 
C)  left; right 
D)  left; left

Question 9

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

Accepted Answer

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

Question 10

Which of the following can a firm use to defend a successful product's brand name?

Accepted Answer

A)  The firm can obtain a patent on the brand name. 
B)  The firm can apply for a trademark to ban other firm's from using the product's name. 
C)  The firm can increase the amount it spends on advertising for the product. 
D)  The firm can attempt to copyright the brand name. 
A)  The firm can obtain a patent on the brand name. 
B)  The firm can apply for a trademark to ban other firm's from using the product's name. 
C)  The firm can increase the amount it spends on advertising for the product. 
D)  The firm can attempt to copyright the brand name.

Question 11

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

Accepted Answer

A) True 
 B)False

Question 12

In San Francisco there are many restaurants that specialize in a wide variety of cuisines.Patronage at these restaurants is influenced by factors such as tastes,price and location.This market is

Accepted Answer

A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic. 
A)  perfectly competitive. 
B)  monopolistically competitive. 
C)  oligopolistic. 
D)  monopolistic.

Question 13

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

Accepted Answer

A) True 
 B)False

Question 14

You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants.Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce.What is likely to happen to your business in the long run?

Accepted Answer

A)  Your competitors are likely to change their menus to make their products more similar to yours. 
B)  Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C)  If your success continues, you will be likely to establish a franchise and expand your market size. 
D)  If you continue to maintain consistent quality, you will be able to earn profits indefinitely. 
A)  Your competitors are likely to change their menus to make their products more similar to yours. 
B)  Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. 
C)  If your success continues, you will be likely to establish a franchise and expand your market size. 
D)  If you continue to maintain consistent quality, you will be able to earn profits indefinitely.

Question 15

One goal a firm tries to achieve when it advertises a product is to

Accepted Answer

A)  make the demand curve for the product more elastic. 
B)  shift the demand curve for the product to the left. 
C)  make the demand curve for the product unitary elastic. 
D)  make the demand curve for the product more inelastic. 
A)  make the demand curve for the product more elastic. 
B)  shift the demand curve for the product to the left. 
C)  make the demand curve for the product unitary elastic. 
D)  make the demand curve for the product more inelastic.

Question 16

A firm cannot control all of the factors that allow it to make economic profits.Which of the following is an example of an uncontrollable factor?

Accepted Answer

A)  product differentiation 
B)  input prices 
C)  producing at a lower average total cost than competing firms 
D)  hiring competent managers 
A)  product differentiation 
B)  input prices 
C)  producing at a lower average total cost than competing firms 
D)  hiring competent managers

Question 17

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?

Accepted Answer

A)  In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets. 
B)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium. 
C)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium. 
D)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run. 
A)  In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets. 
B)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium. 
C)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium. 
D)  In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.

Question 18

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Accepted Answer

A) True 
 B)False

Question 19

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

Accepted Answer

A)  few barriers to entry 
B)  significant barriers to entry 
C)  blocked entry 
D)  no barriers to entry 
A)  few barriers to entry 
B)  significant barriers to entry 
C)  blocked entry 
D)  no barriers to entry

Question 20

The marginal revenue of a monopolistically competitive firm

Accepted Answer

A)  cannot be negative because the price the firm charges will always be greater than zero. 
B)  can be negative if the firm charges a high price. 
C)  can be negative if the firm charges a low price. 
D)  will equal average revenue. 
A)  cannot be negative because the price the firm charges will always be greater than zero. 
B)  can be negative if the firm charges a high price. 
C)  can be negative if the firm charges a low price. 
D)  will equal average revenue.

Monopolistically competitive firms can differentiate their products

For productive efficiency to hold

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?

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Figure 13-13 -Refer to Figure 13-13.What is the area that represents the firm's profit?

Figure 13-6 -After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

One reason Starbucks experienced a decline in sales in the late 2000s is because

If a significant number of smokers switch from smoking tobacco cigarettes to e-cigarettes,a company like NJOY will likely find its demand curve shifting to the and its marginal revenue curve shifting to the as more competitors enter the market.

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

Which of the following can a firm use to defend a successful product's brand name?

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

In San Francisco there are many restaurants that specialize in a wide variety of cuisines.Patronage at these restaurants is influenced by factors such as tastes,price and location.This market is

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

One goal a firm tries to achieve when it advertises a product is to

A firm cannot control all of the factors that allow it to make economic profits.Which of the following is an example of an uncontrollable factor?

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

The marginal revenue of a monopolistically competitive firm

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

Monopolistically competitive firms can differentiate their products

For productive efficiency to hold

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?

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?

Figure 13-13 -Refer to Figure 13-13.What is the area that represents the firm's profit?

Figure 13-6 -After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

One reason Starbucks experienced a decline in sales in the late 2000s is because

If a significant number of smokers switch from smoking tobacco cigarettes to e-cigarettes,a company like NJOY will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.

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

Which of the following can a firm use to defend a successful product's brand name?

A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

In San Francisco there are many restaurants that specialize in a wide variety of cuisines.Patronage at these restaurants is influenced by factors such as tastes,price and location.This market is

In monopolistic competition,if a firm produces a highly desirable product relative to its competitors,the firm will be able to raise its price without losing any customers.

One goal a firm tries to achieve when it advertises a product is to

A firm cannot control all of the factors that allow it to make economic profits.Which of the following is an example of an uncontrollable factor?

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Despite being in a market with ________,from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

The marginal revenue of a monopolistically competitive firm

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

If a significant number of smokers switch from smoking tobacco cigarettes to e-cigarettes,a company like NJOY will likely find its demand curve shifting to the and its marginal revenue curve shifting to the as more competitors enter the market.