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

A monopolistically competitive industry that earns economic profits in the short run will face a more elastic demand curve in the long run.

A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 13-8.What is the profit-maximizing output level?

Central Grocery in New Orleans is famous for its muffaletta,a large round sandwich filled with deli meats and topped with a tangy olive salad.Suppose the following table represents cost and revenue data for Central Grocery.Fill in the columns for TR,MR,MC,ATC,and profit.If Central Grocery wants to maximize profits,what price should it charge for a muffaletta,what quantity should it sell,and what will be the amount of its total profit?

Is a monopolistically competitive firm allocatively efficient?

A monopolistically competitive firm is producing an output level where marginal revenue is greater than marginal cost.What should this firm do to increase its profit or reduce its losses?

Central Grocery in New Orleans is famous for its muffaletta,a large round sandwich filled with deli meats and topped with a tangy olive salad.Suppose the following table represents cost and revenue data for Central Grocery. Illustrate this data by graphing the demand,MR,MC,and ATC curves.Identify the profit-maximizing price and quantity,and show the area representing the total profit received by Central Grocery.

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

Figure 13-18 -Refer to Figure 13-18.Which of the following statements is true?

One of your classmates asserts that advertising,marketing research,and brand management are redundant expenditures because a firm can obtain the same information by simply looking at what customers are already buying.Which of the following is not a response you might offer her?

Which of the following statements is true about marginal revenue?

Figure 13-11 -Refer to Figure 13-11.What is the amount of excess capacity?

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated.How do these problems affect the innovating firm?

A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm's profits in the long run.But the firm can stave off competition and continue to earn economic profits if

Consumers in a monopolistically competitive market do not receive any consumer surplus because the price paid for the product exceeds the marginal cost of production.

Figure 13-3 -Refer to Figure 13-3.What is the marginal revenue of the sixth unit of output?

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

If a monopolistically competitive firm breaks even,the firm

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Long-run equilibrium under monopolistic competition and perfect competition is similar in that