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

For a downward-sloping demand curve,marginal revenue decreases as quantity sold increases.

Quantity Sold Price Total Revenue Marginal Revenue Total Cost Marginal Cost Profit 0 \ 10 \ 0 ---- \ 2 ---- -\ 2 1 9 9 8 2 8 16 13 3 7 21 17 4 6 24 20 5 5 25 22 6 4 24 26 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.Based on the data in the table,which of the following statements is true?

In long-run equilibrium,compared to a perfectly competitive market,a monopolistically competitive industry produces a ________ level of output and charges a ________ price.

If buyers of a monopolistically competitive product feel the products of different sellers are strongly differentiated,then the demand for each seller's product is

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue,total cost is $1,674 and total revenue is $2,000,its average profit is

Quantity Price (dollars) Total Revenue (dollars) Total Variable Cost (dollars) Total Cost (dollars) 0 \ 21 \ 0 \ 0 \ 50 1 20 20 16 66 2 19 38 31 81 3 18 54 45 95 4 17 68 59 109 5 16 80 75 125 6 15 90 93 143 7 14 98 112 162 8 13 104 140 190 9 12 108 180 230 10 11 110 230 280 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.If this firm continues to produce,what is likely to happen to the product's price in the long run?

Which of the following is the best example of a firm that competes in a monopolistically competitive market?

Productive efficiency does not hold for a profit-maximizing,monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies-of-scale region of its average total cost curve.

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

For a monopolistically competitive firm,price equals average revenue.

Complete the following table. Energy Drinks Consumed per Week Price ( ) Total Revenue (TR) Average Revenue ( ) Marginal Revenue ( ) 0 \ 6.00 1 5.50 2 5.00 3 4.50 4 4.00 5 3.50 6 3.00 7 2.50 8 2.00

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

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?

Because the monopolistically competitive firm faces a ________ demand curve for its product,it ________ the price of its output.

In the long run,firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits,but unlike perfectly competitive firms in the long run,monopolistically competitive firms

Every firm that has the ability to affect the price of the good or service it sells will

Figure 13-12 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-12.If the diagram represents a typical firm in the designer watch market,what is likely to happen in the long run?

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

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 variable cost of production?

Figure 13-13 -Refer to Figure 13-13.What is the output price?