Exam 11: Market Entry and Monopolistic Competition

In the short run,a firm in monopolistic competition operates much like a:

The cost of paying celebrities to advertise a product is always less than the increase in profits.

Recall the application about a South African consumer lender that advertised its products including a picture of man in some mailings and a picture of woman in others,what did the South African consumer lender conclude from the respond from men vs.women when the loan offer included a picture of a woman?

If producers differentiate themselves by location,consumers can reduce their travel costs.

-In the long run,the monopolistically competitive firm in Figure 11.3 would earn $ ________ of economic profit.

List four ways in which product differentiation can be achieved.

No barriers to entry in a market implies that,in the long run,economic profit will be:

Why do existing firms earn smaller profits as new firms enter an industry?

As more Dunkin' Donuts outlets open in the areas where Krispy Kreme has been dominant,market prices will ________ and profits will ________.

What effect does the absence of barriers to entry in a monopolistically competitive industry have on the existing firms' demand and marginal revenue curves?

Assume that there is only one firm producing electric toothbrushes and its firm specific demand curve is the same as the market demand curve.If a second firm that also produces electric toothbrushes enters the market,profit of the first firm decreases because:

-Refer to Figure 11.2.In the long run the monopolistic competitor would generate total cost equal to the area:

In some monopolistically competitive markets,products are differentiated by location.

The big advantage to consumers of product differentiation is that it:

Which of the following is a characteristic of monopolistic competition?

In a monopolistically competitive market,product differentiation ensures that in the long run:

-Refer to Figure 11.2.In the long run the monopolistic competitor would generate total revenue equal to the area:

The demand for a product of a monopolistically competitive firm is:

Provide four examples of goods that are sold in monopolistically competitive markets.

In monopolistic competition,the presence of free entry suggests that: