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

In the long run,if the demand curve of a monopolistically competitive firm is tangent to its average total cost curve then

A firm cannot control all of the factors that allow it to make economic profits.Which of the following is an example of an uncontrollable factor?

Figure 13-9 -Refer to Figure 13-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

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

Which of the following is true of a typical firm in a monopolistically competitive industry?

The marketing of the first ballpoint pen by Milton Reynolds showed

In the long-run equilibrium,both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR=MC and charge a price equal to the average total cost of production.

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

In theory,in the long run,monopolistically competitive firms earns zero profits.However,in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

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.At Victoria's profit-maximizing output

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?

Arturo runs a Taco Bell franchise.He is selling 250 Gordita Supremes per week at a price of $2.75.If he lowers the price to $2.70,he will sell 251 Gordita Supremes.What is the marginal revenue of the 251st Gordita Supreme? If selling the extra Gordita Supreme adds $0.20 to Arturo's costs,what will be the effect on his profit from selling 251 Gordita Supremes instead of 250?