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

The table below shows the demand and cost data facing "Velvet Touches," a monopolistically competitive producer of velvet throw pillows. Use the data to answer the following questions. a.Complete the Total Revenue (TR),Marginal Revenue (MR)and Marginal Cost (MC)columns above. b.What are the profit-maximizing price and quantity for Velvet Touches? c.Is the firm making a profit or a loss? How much is the profit or loss? Show your work. d.Is this firm operating in the long run or in the short run? Explain your answer. e.If the firm's profit or loss is typical of all firms in the market for throw pillows,what is likely to happen in the future? Will there be more firms or will some existing firms leave the industry? Explain your answer. f.What will happen to the typical firm's profit or loss after all entry/exit adjustments?

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are

Firms such as Caribou Coffee and Diedrich Coffee operate hundreds of coffeehouses nationwide while firms such as Dunn Brothers Coffee operate only in four states.How would you characterize these stores?

Table 13-1 -Refer to Table 13-1.The Table shows

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18.If the average total cost at this output is $16.55,then its total profit is

The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair.It sells 8 pairs of jeans per day at a price of $90 per pair.The marginal revenue of the eighth pair of jeans is

When a firm faces a downward-sloping demand curve,marginal revenue

Figure 13-11 -Refer to Figure 13-11.What is the productively efficient output for the firm represented in the diagram?

If a perfectly competitive firm maximizes short-run profits,its marginal revenue will be positive and less than its price.

Although advertising raises the price of a monopolistic competitor's product,it does confer a benefit to consumers.Which of the following is a benefit to consumers?

Unlike a perfectly competitive firm,for a monopolistically competitive firm

In the United States,the average person mostly patronizes firms that operate in

Table 13-1 -Refer to Table 13-1.What portion of the marginal revenue of the 4th unit is due to the output effect and what portion is due to the price effect?

Which of the following statements is true about advertising by a monopolistically competitive firm?

Is a monopolistically competitive firm productively efficient?

Figure 13-5 -Refer to Figure 13-5.The candy store represented in the diagram is currently selling Q_a units of candy at a price of P_a.Is this candy store maximizing its profit and if it is not,what would you recommend to the firm?

Which of the following is an example of a factor that a firm's owners and managers can control in making the firm successful?

Table 13-4 Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Victoria's profit-maximizing output is where

If marginal revenue is negative then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling one more unit of the good.

If a firm faces a downward-sloping demand curve