Question 1

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Accepted Answer

A) True 
 B)False

Question 2

The product-variety externality states that entry of a new firm conveys a negative externality on consumers.

Accepted Answer

A) True 
 B)False

Question 3

Firms in a monopolistically competitive market

Accepted Answer

A)   are price takers.
B)   produce an output level that minimizes average total cost in the long run.
C)   maximize profits by producing where price equals marginal cost.
D)   cannot earn economic profits in the long run.E) A) and B)
F) All of the above

Question 4

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) A) and C)

Question 5

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Accepted Answer

A)   less than 100 units of output.
B)   100 units of output.
C)   between 100 and 133.33 units of output.
D)   more than 133.33 units of output.E) None of the above
F) A) and B)

Question 6

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Accepted Answer

A)   perfectly competitive market.
B)   monopolistically competitive market.
C)   oligopoly.
D)   monopoly.E) C) and D)
F) A) and B)

Question 7

In which of the following market structures do firms produce the welfare-maximizing level of output?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   monopoly
D)   Both a and b are correct.E) B) and C)
F) C) and D)

Question 8

Figure 16-13 
-Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Accepted Answer

The answer of Figure 16-13 
-Refer to Figure 16-13. Which...

Question 9

Critics of advertising argue that advertising

Accepted Answer

A)   creates desires that otherwise might not exist.
B)   hinders competition.
C)   often fails to convey substantive information.
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 10

Figure 16-7 
-Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive market?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) B) and C)
F) All of the above

Question 11

A monopolistically competitive firm faces the following demand schedule for its product:  The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with

Accepted Answer

A)   9 units of output.
B)   15 units of output.
C)   21 units of output.
D)   30 units of output.E) None of the above
F) A) and D)

Question 12

Figure 16-2. The figure is drawn for a monopolistically competitive firm. 
-Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Accepted Answer

A)   P=$24, profit=$0
B)   P=$36, profit=$48
C)   P=$36, profit=$0
D)   P=$36, profit=$144E) B) and D)
F) B) and C)

Question 13

Under which of the following market structures would consumers likely receive the most product variety?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   oligopoly
D)   monopolyE) A) and B)
F) A) and D)

Question 14

Oligopoly and monopolistic competition are examples of a market structure called imperfect competition.

Accepted Answer

A) True 
 B)False

Question 15

Scenario 16-4
Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition.
-Refer to Scenario 16-4. As a result of the new restaurant, existing restauranteurs in Boston are likely to experience a

Accepted Answer

A)   product-variety externality, which is a negative externality.
B)   product-variety externality, which is a positive externality.
C)   business-stealing externality, which is a negative externality.
D)   business-stealing externality, which is a positive externality.E) B) and C)
F) All of the above

Question 16

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. The firm's maximum profit is

Accepted Answer

A)   $-5,000.00.
B)   $0.
C)   $5,000.00.
D)   $8,887.78.E) B) and C)
F) B) and D)

Question 17

When McDonald's opens a store in Dhaka, Bangladesh, it has a strong incentive to enforce product quality consistent with stores in the United States.

Accepted Answer

A) True 
 B)False

Question 18

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

Accepted Answer

A)   the short run but not in the long run.
B)   the long run but not in the short run.
C)   both the short run and the long run.
D)   neither the short run nor the long run.E) All of the above
F) C) and D)

Question 19

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) A) and D)
F) A) and C)

Question 20

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Accepted Answer

A) True 
 B)False

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
verified

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Correct Answer
verified

Oligopoly and monopolistic competition are examples of a market structure called imperfect competition.

Correct Answer
verified

Critics of advertising argue that advertising

Correct Answer
verified

In which of the following market structures do firms produce the welfare-maximizing level of output?

Correct Answer
verified

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

Correct Answer
verified

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Correct Answer
verified

Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Correct Answer
verified

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Correct Answer
verified

The product-variety externality states that entry of a new firm conveys a negative externality on consumers.

Correct Answer
verified

Correct Answer
verified

When McDonald's opens a store in Dhaka, Bangladesh, it has a strong incentive to enforce product quality consistent with stores in the United States.

Correct Answer
verified

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Correct Answer
verified

In monopolistic competition as well as in monopoly,

Correct Answer
verified

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Correct Answer
verified

Figure 16-7 -Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive market?

Correct Answer
verified

Under which of the following market structures would consumers likely receive the most product variety?

Correct Answer
verified

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

Correct Answer
verified

Firms in a monopolistically competitive market

Correct Answer
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A monopolistically competitive firm faces the following demand schedule for its product: The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with

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

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Correct AnswerverifiedShow Answer

Oligopoly and monopolistic competition are examples of a market structure called imperfect competition.

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

In which of the following market structures do firms produce the welfare-maximizing level of output?

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

Correct AnswerverifiedShow Answer

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Correct AnswerverifiedShow Answer

Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Correct AnswerverifiedShow Answer

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Correct AnswerverifiedShow Answer

The product-variety externality states that entry of a new firm conveys a negative externality on consumers.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When McDonald's opens a store in Dhaka, Bangladesh, it has a strong incentive to enforce product quality consistent with stores in the United States.

Correct AnswerverifiedShow Answer

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Correct AnswerverifiedShow Answer

In monopolistic competition as well as in monopoly,

Correct AnswerverifiedShow Answer

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Correct AnswerverifiedShow Answer

Figure 16-7 -Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive market?

Correct AnswerverifiedShow Answer

Under which of the following market structures would consumers likely receive the most product variety?

Correct AnswerverifiedShow Answer

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

Correct AnswerverifiedShow Answer

Firms in a monopolistically competitive market

Correct AnswerverifiedShow Answer

A monopolistically competitive firm faces the following demand schedule for its product: The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with

Correct AnswerverifiedShow Answer

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