Question 1

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Accepted Answer

A)   the demand curve will be perfectly elastic.
B)   price exceeds marginal cost.
C)   marginal cost must be falling.
D)   marginal revenue exceeds marginal cost.E) B) and C)
F) B) and D)

Question 2

Edward Chamberlin argued that governments should

Accepted Answer

A)   ban the use of brand names.
B)   not enforce the trademarks that companies use to identify their products.
C)   vigorously enforce the trademarks that companies use to identify their products.
D)   tax companies whose products have brand names in proportion to how much consumers recognize their products.E) B) and D)
F) A) and B)

Question 3

Figure 16-4
 
-Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) A) and B)
F) A) and C)

Question 4

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Accepted Answer

A)   natural monopoly
B)   perfectly competition
C)   monopolistic competition
D)   monopolyE) All of the above
F) B) and C)

Question 5

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Accepted Answer

A)   price may exceed marginal revenue, but in the long run, price equals marginal revenue.
B)   price may exceed marginal cost, but in the long run, price equals marginal cost.
C)   price may exceed average total cost, but in the long run, price equals average total cost.
D)   there are many firms in the market, but in the long run, there are only a few firms in the market.E) A) and D)
F) B) and D)

Question 6

A firm produces the welfare-maximizing level of output

Accepted Answer

A)   only when the market is perfectly competitive.
B)   only when the market is a monopoly or monopolistically competitive.
C)   only when the market is monopolistically competitive or perfectly competitive.
D)   when the market is perfectly competitive, monopolistically competitive, or monopolistic.E) All of the above
F) None of the above

Question 7

A monopolistically competitive firm chooses

Accepted Answer

A)   the quantity of output to produce, but the market determines price.
B)   the price, but competition in the market determines the quantity.
C)   price, but output is determined by a cartel production quota.
D)   the quantity of output to produce and the price at which it will sell its output.E) A) and B)
F) A) and C)

Question 8

Critics of advertising argue that advertising

Accepted Answer

A)   creates desires that otherwise might not exist.
B)   enhances competition.
C)   benefits television viewers who enjoy tv commercials.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 9

A monopolistically competitive market is like a monopoly in that

Accepted Answer

A)   both market structures feature easy entry by new firms in the long run.
B)   the main objective of firms in both market structures is something other than profit maximization.
C)   firms in both market structures produce the welfare-maximizing level of output.
D)   firms in both market structures set price above marginal cost.E) B) and D)
F) None of the above

Question 10

In monopolistically competitive markets,positive economic profits

Accepted Answer

A)   suggest that some existing firms will exit the market.
B)   suggest that new firms will enter the market.
C)   are sustained through government-imposed barriers to entry.
D)   are never possible.E) A) and B)
F) None of the above

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   Critics of advertising argue that firms advertise to manipulate consumers' tastes.
B)   Defenders of advertising argue that advertising provides valuable product information to consumers.
C)   An industry with many brand name products will be more competitive than one with many generic products.
D)   The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product.E) A) and D)
F) A) and C)

Question 12

In monopolistic competition as well as in monopoly,

Accepted Answer

A)   price exceeds marginal revenue for each firm.
B)   profit is zero in a long-run equilibrium for each firm.
C)   entry and exit by firms are unrestricted.
D)   there are at most a few firms in each market.E) C) and D)
F) B) and C)

Question 13

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.
 
-Refer to Table 16-3.Based on the concentration ratio,which industry is the least competitive?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) B) and C)
F) A) and C)

Question 14

In which of the following product markets are we likely to observe the largest amount of advertising?

Accepted Answer

A)   markets with highly differentiated products
B)   perfectly competitive markets
C)   markets in which industrial products are sold
D)   markets in which there is very little difference between different firms' productsE) A) and D)
F) A) and C)

Question 15

Most businesses advertise their products and services.Some business use SPAM emails to advertise because the cost of a mass e-mail is close to zero.Other business spend millions of dollars to advertise in a 30-second spot during the Super Bowl.Having observed this real world data,economists argue that the amount of money that a business spends on advertising is a proxy for a good or service's

Accepted Answer

A)   size.
B)   quality.
C)   newness.
D)   cost of production.E) A) and C)
F) None of the above

Question 16

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

Accepted Answer

Business-stealing effect: if new entrant...

Question 17

Figure 16-8
The figure is drawn for a monopolistically-competitive firm.
 
-Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

Accepted Answer

A)   efficient scale of the firm.
B)   short-run equilibrium quantity of output for the firm.
C)   long-run equilibrium quantity of output for the firm.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Exam 16: Monopolistic Competition.

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.Based on the concentration ratio,which industry is the least competitive?

Correct Answer
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A monopolistically competitive market is like a monopoly in that

Correct Answer
verified

In monopolistically competitive markets,positive economic profits

Correct Answer
verified

Correct Answer
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A firm produces the welfare-maximizing level of output

Correct Answer
verified

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Correct Answer
verified

In which of the following product markets are we likely to observe the largest amount of advertising?

Correct Answer
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Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

Correct Answer
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In monopolistic competition as well as in monopoly,

Correct Answer
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A monopolistically competitive firm chooses

Correct Answer
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Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Edward Chamberlin argued that governments should

Correct Answer
verified

Critics of advertising argue that advertising

Correct Answer
verified

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

Correct Answer
verified
Business-stealing effect: if new entrant...
View Answer

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Correct Answer
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Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Correct Answer
verified

Exam 16: Monopolistic Competition.

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.Based on the concentration ratio,which industry is the least competitive?

Correct AnswerverifiedShow Answer

A monopolistically competitive market is like a monopoly in that

Correct AnswerverifiedShow Answer

In monopolistically competitive markets,positive economic profits

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm produces the welfare-maximizing level of output

Correct AnswerverifiedShow Answer

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Correct AnswerverifiedShow Answer

In which of the following product markets are we likely to observe the largest amount of advertising?

Correct AnswerverifiedShow Answer

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

Correct AnswerverifiedShow Answer

In monopolistic competition as well as in monopoly,

Correct AnswerverifiedShow Answer

A monopolistically competitive firm chooses

Correct AnswerverifiedShow Answer

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Edward Chamberlin argued that governments should

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

Correct AnswerverifiedBusiness-stealing effect: if new entrant...View AnswerShow Answer

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

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Business-stealing effect: if new entrant...
View Answer

Correct Answer
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Correct Answer
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