Exam 14: Monopolistic Competition and Product Differentiation

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

If the toothpaste market is monopolistically competitive, product differentiation may take the form of:

General Snacks is a typical firm in a market characterized by monopolistic competition. Initially, the market is in long-run equilibrium, and then there is an increase in the market demand for snacks. In the short run the price of snacks will _____ and the output of snacks will _____.

If a firm operating in monopolistic competition is producing a quantity at which _____, then the marginal decision rule tells us that profit _____.

An industry with easy entry and exit of a large number of small firms producing a standardized product is:

The demand curve for a firm in monopolistic competition is _____ facing a perfectly competitive firm.

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. If the restaurant shown here were to raise its price above the profit-maximizing price, its total revenue would:

For the monopolistically competitive wild-caught seafood market, the demand curve for any individual firm is _____, and there are _____ producers of seafood.

A monopolistically competitive firm has a downward-sloping demand curve for its product, primarily because:

If a firm operating in monopolistic competition is producing a quantity that generates MC < MR, then the marginal decision rule tells us that profit:

Suppose a monopolistically competitive firm is making a profit, but it can increase its profits by increasing output. At the current level of output:

The _____ demand curve for a firm operating in a monopolistically competitive market _____ facing a perfectly competitive firm.

Use the following to answer questions Figure: Profit Maximization for a Firm in Monopolistic Competition -(Figure: Profit Maximization for a Firm in Monopolistic Competition) Look at the figure Profit Maximization for a Firm in Monopolistic Competition. Suppose that an innovation reduces a firm's costs from ATC to ATC. After the innovation reduces the cost, the firm's maximum economic profit is:

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

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

If a firm operating in monopolistic competition is producing a quantity at which MC < MR, then profit can be _____ by _____.

To maximize profit, a monopolistically competitive firm should produce the level of output at which:

Product differentiation under monopolistic competition means that each firm:

Monopolistic competition is similar to perfect competition because firms in both market structures:

In a long-run equilibrium, firms in a monopolistically competitive industry sell at a price: