Question 1

In the short run,a firm in a monopolistically competitive market operates much like a

Accepted Answer

A)   firm in a perfectly competitive market.
B)   firm in an oligopoly.
C)   monopolist.
D)   monopsonist.E) B) and D)
F) A) and D)

Question 2

How does advertising signal to consumers that the product is a good one?

Accepted Answer

A)   By seeing famous people using the product,consumers infer that they too can be famous.
B)   By being willing to spend money on advertising,firms let consumers know the product is likely a good one since firms would not likely advertise a poor product.
C)   By making consumers laugh during commercials,firms are associating positive experiences with the product.
D)   Without allowing consumers to actually use the product,it is not possible for firms to signal to consumers the product's quality.E) B) and C)
F) A) and D)

Question 3

Which of the following is not an argument made by critics of advertising?

Accepted Answer

A)   Advertising manipulates people's tastes.
B)   Advertising impedes competition.
C)   Advertising promotes economies of scale.
D)   Advertising increases the perception of product differentiation.E) A) and D)
F) B) and C)

Question 4

A monopolistically competitive firm faces the following demand curve for its product:  The firm has total fixed costs of $20 and a constant marginal cost of $5 per unit.The firm will maximize profit with the production of

Accepted Answer

A)   6 units of output.
B)   8 units of output.
C)   10 units of output.
D)   12 units of output.E) B) and C)
F) None of the above

Question 5

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) B) and C)
F) C) and D)

Question 6

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9.In response to the situation represented by the figure,we would expect

Accepted Answer

A)   some of the firms that are currently in the market to exit.
B)   the demand for this firm's product to increase,assuming this firm does not exit.
C)   this firm's profit to move from its current value toward zero.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 7

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) A) and D)

Question 8

In the study done by Lee Benham on advertising for eyeglasses,

Accepted Answer

A)   advertising increased the average price.
B)   advertising decreased the average price.
C)   there was no difference in price,but quality was better in the states that didn't allow advertising.
D)   advertising appeared to have no effect whatsoever in the states that permitted advertising.E) A) and D)
F) A) and B)

Question 9

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Accepted Answer

Because its product ...

Question 10

In both perfect competition and monopolistic competition,each firm

Accepted Answer

A)   has some monopoly power.
B)   sells a product that is at least slightly different from those of other firms.
C)   faces a downward-sloping demand curve.
D)   has many competitors.E) C) and D)
F) A) and B)

Question 11

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e. ,on an average night,80 percent of the hotel rooms are full) .This kind of excess capacity is indicative of what kind of market?

Accepted Answer

A)   monopoly
B)   perfect competition
C)   monopolistic competition
D)   oligopolyE) All of the above
F) A) and B)

Question 12

Figure 16-7
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms. 
-Refer to Figure 16-7.Panel (d) illustrates the change that would occur if existing firms faced

Accepted Answer

A)   long-run economic losses.
B)   a decrease in the diversity of products offered in the market.
C)   new entrants in the market.
D)   firms exiting the market.E) All of the above
F) A) and B)

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) All of the above

Question 14

A downward-sloping demand curve

Accepted Answer

A)   is a feature of all monopolistically competitive firms.
B)   means that the firm in question will never experience a zero profit.
C)   causes marginal revenue to exceed price.
D)   prohibits firms from earning positive economic profits in the long run.E) B) and C)
F) A) and B)

Question 15

When a firm's demand curve is tangent to its average total cost curve,the

Accepted Answer

A)   firm's economic profit is zero.
B)   firm must be earning economic profits.
C)   firm must be incurring economic losses.
D)   firm must be operating at its efficient scale.E) B) and D)
F) B) and C)

Question 16

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10.
 
-Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,what price should the firm charge to maximize profit?

Accepted Answer

A)   $5
B)   $7
C)   $9
D)   $11E) A) and C)
F) None of the above

Question 17

Entry by new firms into a monopolistically competitive market

Accepted Answer

A)   creates additional consumer surplus.
B)   imposes a positive externality on existing firms.
C)   leads to the same externalities that are observed when new firms enter a perfectly competitive market.
D)   increases the demand for existing firms' products.E) None of the above
F) A) and C)

Question 18

Figure 16-1.The figure is drawn for a monopolistically competitive firm. 
-Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Accepted Answer

A)   $-30.
B)   $22.
C)   $36.
D)   $42.E) A) and D)
F) B) and C)

Question 19

Which of the following industries has the highest concentration ratio?

Accepted Answer

A)   wheat
B)   novels
C)   cigarettes
D)   dog foodE) A) and C)
F) B) and C)

Question 20

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Accepted Answer

A)   P = AR
B)   MR = MC
C)   P > MC
D)   All of the above are correct.E) B) and C)
F) A) and D)

Exam 16: Monopolistic Competition

In the short run,a firm in a monopolistically competitive market operates much like a

Correct Answer
verified

When a firm's demand curve is tangent to its average total cost curve,the

Correct Answer
verified

A downward-sloping demand curve

Correct Answer
verified

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e. ,on an average night,80 percent of the hotel rooms are full) .This kind of excess capacity is indicative of what kind of market?

Correct Answer
verified

Correct Answer
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In the study done by Lee Benham on advertising for eyeglasses,

Correct Answer
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Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10. -Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,what price should the firm charge to maximize profit?

Correct Answer
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Which of the following industries has the highest concentration ratio?

Correct Answer
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Which of the following is not an argument made by critics of advertising?

Correct Answer
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Figure 16-1.The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Correct Answer
verified

In both perfect competition and monopolistic competition,each firm

Correct Answer
verified

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $20 and a constant marginal cost of $5 per unit.The firm will maximize profit with the production of

Correct Answer
verified

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Correct Answer
verified

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
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Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9.In response to the situation represented by the figure,we would expect

Correct Answer
verified

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

Correct Answer
verified

How does advertising signal to consumers that the product is a good one?

Correct Answer
verified

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Correct Answer
verified
Because its product ...
View Answer

A monopolistically competitive market is like a monopoly in that

Correct Answer
verified

Entry by new firms into a monopolistically competitive market

Correct Answer
verified

Exam 16: Monopolistic Competition

In the short run,a firm in a monopolistically competitive market operates much like a

Correct AnswerverifiedShow Answer

When a firm's demand curve is tangent to its average total cost curve,the

Correct AnswerverifiedShow Answer

A downward-sloping demand curve

Correct AnswerverifiedShow Answer

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e. ,on an average night,80 percent of the hotel rooms are full) .This kind of excess capacity is indicative of what kind of market?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the study done by Lee Benham on advertising for eyeglasses,

Correct AnswerverifiedShow Answer

Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10. -Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,what price should the firm charge to maximize profit?

Correct AnswerverifiedShow Answer

Which of the following industries has the highest concentration ratio?

Correct AnswerverifiedShow Answer

Which of the following is not an argument made by critics of advertising?

Correct AnswerverifiedShow Answer

Figure 16-1.The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Correct AnswerverifiedShow Answer

In both perfect competition and monopolistic competition,each firm

Correct AnswerverifiedShow Answer

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $20 and a constant marginal cost of $5 per unit.The firm will maximize profit with the production of

Correct AnswerverifiedShow Answer

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

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

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9.In response to the situation represented by the figure,we would expect

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How does advertising signal to consumers that the product is a good one?

Correct AnswerverifiedShow Answer

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Correct AnswerverifiedBecause its product ...View AnswerShow Answer

A monopolistically competitive market is like a monopoly in that

Correct AnswerverifiedShow Answer

Entry by new firms into a monopolistically competitive market

Correct AnswerverifiedShow Answer

Correct Answer
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Because its product ...
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Correct Answer
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