Question 1

A profit-maximizing firm in a monopolistically competitive market can earn positive,negative,or zero profits in the short run.

Accepted Answer

A) True 
 B)False

Question 2

Figure 16-8
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-8.For this firm,the long-run equilibrium quantity of output is

Accepted Answer

A)   100 and the long-run equilibrium price is $90.
B)   100 and the long-run equilibrium price is $140.
C)   133.33 and the long-run equilibrium price is $56.67.
D)   133.33 and the long-run equilibrium price is $123.33.E) B) and D)
F) All of the above

Question 3

Table 16-4
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-4.How much profit will this firm earn when it chooses its output to maximize profit?

Accepted Answer

A)   a $4 loss
B)   a $2 loss
C)   a $6 profit
D)   a $16 profitE) B) and C)
F) A) and D)

Question 4

Figure 16-2
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

Accepted Answer

A)   P=$60,Q=20 units,profit=$200
B)   P=$80,Q=20 units,profit=$200
C)   P=$75,Q=25 units,profit=$100
D)   P=$60,Q=40 units,profit=$0E) C) and D)
F) B) and D)

Question 5

A monopolistically competitive firm

Accepted Answer

A)   has the usual deadweight loss of monopoly pricing.
B)   experiences a zero profit in a long-run equilibrium.
C)   is said to have excess capacity.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 6

Table 16-4
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-4.If the government forces this firm to produce at its efficient output level,how much output will this firm produce?

Accepted Answer

A)   0 units of output
B)   1 unit of output
C)   2 units of output
D)   3 units of outputE) All of the above
F) B) and C)

Question 7

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 B)
F) A) and C)

Question 8

If advertising decreases the elasticity of demand for specific brand names of hard liquor,we would expect firms to be able to charge a larger markup over marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is not correct?

Accepted Answer

A)   The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
B)   Monopolistically competitive firms advertise in order to increase the elasticity of the demand curve they face.
C)   Expensive advertising might help consumers if it is a signal that the product is good.
D)   Brand names acquired at great cost might help consumers by assuring quality.E) A) and B)
F) None of the above

Question 10

Figure 16-2 
-Refer to Figure 16-2.The profit for this firm is

Accepted Answer

A)   $375.
B)   $500.
C)   $1000.
D)   $1250.E) None of the above
F) B) and C)

Question 11

Two college students,Mary and Maggie,are spending spring break in Florida.Mary buys a cup of coffee each morning at the local Starbucks rather than from one of the local coffee shops.Maggie claims that Mary is irrational because she never purchases Starbucks coffee at home,and Starbucks coffee costs more than the coffee sold by local shops.An economist would most likely explain Mary's behavior by suggesting that

Accepted Answer

A)   Mary's behavior is rational,but Maggie's behavior is clearly irrational.
B)   Mary's behavior is clearly irrational,but Maggie's behavior is rational.
C)   the Starbucks brand name suggests consistent quality.
D)   the advertising by Starbucks in Florida is more persuasive than the advertising by Starbucks in Mary and Maggie's home town.E) None of the above
F) A) and D)

Question 12

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Accepted Answer

A) True 
 B)False

Question 13

Figure 16-3 
-Refer to Figure 16-3.When this firm profit-maximizes,what is the amount of the firm's profit or loss?

Accepted Answer

The answer of Figure 16-3 
-Refer to Figure 16-3.When this...

Question 14

A firm in a monopolistically competitive market is similar to a monopoly in the sense that (i) 
They both face downward-sloping demand curves.
(ii) 
They both charge a price that exceeds marginal cost.
(iii) 
Free entry and exit determines the long-run equilibrium.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (ii) only
D)   (i) , (ii) ,and (iii) onlyE) All of the above
F) A) and D)

Question 15

Figure 16-3 
-Refer to Figure 16-3.How much excess capacity does this firm have?

Accepted Answer

The answer of Figure 16-3 
-Refer to Figure 16-3.How much...

Question 16

Which of the following statements is correct?

Accepted Answer

A)   Cigarettes are likely to be produced in a monopolistically competitive industry.
B)   Novels are likely to be produced in a monopoly industry.
C)   Movies are likely to be produced in a monopolistically competitive industry.
D)   Milk is likely to be produced in an oligopoly industry.E) B) and C)
F) B) and D)

Question 17

Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus.This externality is called the

Accepted Answer

product-va...

Question 18

With respect to monopolistic competition,

Accepted Answer

A)   both the business-stealing externality and the product-variety externality are positive externalities.
B)   the business-stealing externality is a positive externality,while the product-variety externality is a negative externality.
C)   the business-stealing externality is a negative externality,while the product-variety externality is a positive externality.
D)   both the business-stealing externality and the product-variety externality are negative externalities.E) A) and B)
F) B) and C)

Question 19

An oligopoly is a market in which

Accepted Answer

A)   there are only a few sellers,each offering a product similar or identical to the products offered by other firms in the market.
B)   firms are price takers.
C)   the actions of one seller in the market have no impact on the other sellers' profits.
D)   there are many price-taking firms,each offering a product similar or identical to the products offered by other firms in the market.E) None of the above
F) A) and D)

Question 20

Figure 16-5 
-Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) None of the above
F) C) and D)

Exam 16: Monopolistic Competition

Table 16-4 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.How much profit will this firm earn when it chooses its output to maximize profit?

Correct Answer
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Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Figure 16-2 -Refer to Figure 16-2.The profit for this firm is

Correct Answer
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A profit-maximizing firm in a monopolistically competitive market can earn positive,negative,or zero profits in the short run.

Correct Answer
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With respect to monopolistic competition,

Correct Answer
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Figure 16-5 -Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Correct Answer
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Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus.This externality is called the

Correct Answer
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product-va...
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Figure 16-3 -Refer to Figure 16-3.When this firm profit-maximizes,what is the amount of the firm's profit or loss?

Correct Answer
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Table 16-4 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.If the government forces this firm to produce at its efficient output level,how much output will this firm produce?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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A monopolistically competitive firm

Correct Answer
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Correct Answer
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Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.For this firm,the long-run equilibrium quantity of output is

Correct Answer
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An oligopoly is a market in which

Correct Answer
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Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

Correct Answer
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Figure 16-3 -Refer to Figure 16-3.How much excess capacity does this firm have?

Correct Answer
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If advertising decreases the elasticity of demand for specific brand names of hard liquor,we would expect firms to be able to charge a larger markup over marginal cost.

Correct Answer
verified

A firm in a monopolistically competitive market is similar to a monopoly in the sense that (i) They both face downward-sloping demand curves. (ii) They both charge a price that exceeds marginal cost. (iii) Free entry and exit determines the long-run equilibrium.

Correct Answer
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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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Exam 16: Monopolistic Competition

Table 16-4 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.How much profit will this firm earn when it chooses its output to maximize profit?

Correct AnswerverifiedShow Answer

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Figure 16-2 -Refer to Figure 16-2.The profit for this firm is

Correct AnswerverifiedShow Answer

A profit-maximizing firm in a monopolistically competitive market can earn positive,negative,or zero profits in the short run.

Correct AnswerverifiedShow Answer

With respect to monopolistic competition,

Correct AnswerverifiedShow Answer

Figure 16-5 -Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Correct AnswerverifiedShow Answer

Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus.This externality is called the

Correct Answerverifiedproduct-va...View AnswerShow Answer

Figure 16-3 -Refer to Figure 16-3.When this firm profit-maximizes,what is the amount of the firm's profit or loss?

Correct AnswerverifiedShow Answer

Table 16-4 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.If the government forces this firm to produce at its efficient output level,how much output will this firm produce?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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A monopolistically competitive firm

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Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.For this firm,the long-run equilibrium quantity of output is

Correct AnswerverifiedShow Answer

An oligopoly is a market in which

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Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

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Figure 16-3 -Refer to Figure 16-3.How much excess capacity does this firm have?

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If advertising decreases the elasticity of demand for specific brand names of hard liquor,we would expect firms to be able to charge a larger markup over marginal cost.

Correct AnswerverifiedShow Answer

A firm in a monopolistically competitive market is similar to a monopoly in the sense that (i) They both face downward-sloping demand curves. (ii) They both charge a price that exceeds marginal cost. (iii) Free entry and exit determines the long-run equilibrium.

Correct AnswerverifiedShow Answer

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

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product-va...
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