Exam 14: Monopolistic Competition and Product Differentiation

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit of firms is:

Use the following to answer questions Figure: The Restaurant Market -(Figure: The Restaurant Market) The figure The Restaurant Market shows curves facing a typical restaurant. Assume that many firms, differentiated products, and easy entry and exit characterize the restaurant industry. The restaurant shown here will maximize profits at quantity:

Use the following to answer questions Figure: The Market for Gas Stations -(Figure: The Market for Gas Stations) Look at the figure The Market for Gas Stations. This market is characterized by many firms, differentiated products, easy entry, and easy exit. In long-run equilibrium, the economic profit earned by the typical gas station will be:

In monopolistic competition, each firm:

Toby operates a small deli downtown. The deli industry is monopolistically competitive. In the long run, Toby will produce where:

The wedding dress industry is monopolistically competitive. As a result:

Use the following to answer questions Figure: The Restaurant Market -(Figure: The Restaurant Market) The figure The Restaurant Market shows curves facing a typical restaurant. Assume that many firms, differentiated products, and easy entry and exit characterize the restaurant market. In long-run equilibrium, the economic profit earned by the typical restaurant in the community will be:

Because most communities have a large number of similar but not identical substitutes, the market for financial planners is best considered to be:

The model of monopolistic competition characterizes the market for plumbing services in a city. This market is initially in long-run equilibrium, but then there is an increase in market demand for plumbing services. We expect that in the long run:

In the long run, monopolistically competitive firms:

Which of the following describes a feature shared by monopolistic competition and perfect competition?

Use the following to answer questions Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition) In panel (A) of the figure Firms in Monopolistic Competition, the profit-maximizing quantity of output is determined by the intersection at point:

A gas station operates in a monopolistically competitive market and is in short-run equilibrium. Suppose that a fixed cost for this firm decreases. As a result, the firm's price will _____, the firm's output will _____, and the firm's economic profit will _____.

Because most communities have a large number of similar but not identical substitutes, the market for florists is best considered:

The sources of product differentiation do NOT include:

In the long run, if a monopolistically competitive firm produces the optimal level of output:

A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

Monopolistically competitive firms have zero economic profits in the long run because of:

An industry with a few interdependent firms is best described as an example of:

Suppose a monopolistically competitive firm can increase its profits by decreasing its output. At the current output: