Question 1

When products are differentiated by location what kind of tradeoffs exist?

Accepted Answer

A) Firms that sell the same product at different locations have a monopoly in their location and buyers pay a higher price. 
B) the larger the numbers of firms that sell the same product at different locations,the higher the level of variety 
C) the smaller the numbers of firms that sell the same product at different locations,the higher the average cost of production 
D) the larger the numbers of firms that sell the same product at different locations,the higher the average cost of production 
A) Firms that sell the same product at different locations have a monopoly in their location and buyers pay a higher price. 
B) the larger the numbers of firms that sell the same product at different locations,the higher the level of variety 
C) the smaller the numbers of firms that sell the same product at different locations,the higher the average cost of production 
D) the larger the numbers of firms that sell the same product at different locations,the higher the average cost of production

Question 2

There are patents and regulations that can prevent firms from entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 3

A monopolistically competitive firm influences market price by virtue of its size.

Accepted Answer

A) True 
 B)False

Question 4

In long-run equilibrium,a monopolistically competitive firm's marginal revenue is equal to its marginal cost.

Accepted Answer

A) True 
 B)False

Question 5

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

Accepted Answer

A) True 
 B)False

Question 6

-Refer to Figure 11.2.In the long run the monopolistic competitor would produce ________ units.

Accepted Answer

A) 0C 
B) 0D 
C) 0E 
D) none of these 
A) 0C 
B) 0D 
C) 0E 
D) none of these

Question 7

-In the long run,the monopolistically competitive firm in Figure 11.3 would generate $ ________ of total revenue.

Accepted Answer

A) 350 
B) 450 
C) 238 
D) 480 
A) 350 
B) 450 
C) 238 
D) 480

Question 8

Firms in monopolistically competitive markets sell identical products.

Accepted Answer

A) True 
 B)False

Question 9

If there is free entry in a market,then in the long run economic profit will be above average.

Accepted Answer

A) True 
 B)False

Question 10

Firms in monopolistic competition differentiate their products through:

Accepted Answer

A) physical characteristics. 
B) price. 
C) both A and B. 
D) neither A nor B. 
A) physical characteristics. 
B) price. 
C) both A and B. 
D) neither A nor B.

Question 11

One key difference between profit maximizing firms in monopolistic competition versus perfect competition is that:

Accepted Answer

A) monopolistically competitive firms will earn a positive profit in the long run. 
B) perfectly competitive firms break even in the long run,but monopolistically competitive firms do not. 
C) monopolistically competitive firms charge a price greater than marginal revenue. 
D) none of the above 
A) monopolistically competitive firms will earn a positive profit in the long run. 
B) perfectly competitive firms break even in the long run,but monopolistically competitive firms do not. 
C) monopolistically competitive firms charge a price greater than marginal revenue. 
D) none of the above

Question 12

If firms in a monopolistically competitive industry are earning economic profits,then in the long run:

Accepted Answer

A) these firms can continue earning economic profits because entry into the industry is blocked. 
B) new firms producing close substitutes will continue to enter the market until economic profit is zero. 
C) new firms producing the exact same product will enter the industry and this entry will continue until economic profit is zero. 
D) the government will most likely regulate firms in this industry to reduce the economic profits. 
A) these firms can continue earning economic profits because entry into the industry is blocked. 
B) new firms producing close substitutes will continue to enter the market until economic profit is zero. 
C) new firms producing the exact same product will enter the industry and this entry will continue until economic profit is zero. 
D) the government will most likely regulate firms in this industry to reduce the economic profits.

Question 13

Explain the tradeoffs associated with monopolistic competition relative to monopoly.

Accepted Answer

Compared with monopoly,markets that are

Question 14

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

Accepted Answer

A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly 
A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly

Question 15

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate $________ of total revenue.

Accepted Answer

A) 350 
B) 528 
C) 450 
D) 238 
A) 350 
B) 528 
C) 450 
D) 238

Question 16

Monopolistically competitive firms achieve the degree of market power they command through:

Accepted Answer

A) size. 
B) product differentiation. 
C) collusion. 
D) barriers to entry. 
A) size. 
B) product differentiation. 
C) collusion. 
D) barriers to entry.

Question 17

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

Accepted Answer

A) free entry 
B) identical products across sellers 
C) Firms face downward sloping demand curves. 
D) Firms are price takers. 
A) free entry 
B) identical products across sellers 
C) Firms face downward sloping demand curves. 
D) Firms are price takers.

Question 18

In monopolistic competition,firms can have some market power based on the fact that:

Accepted Answer

A) they are large in size. 
B) there are barriers to entry. 
C) there is only one firm in the industry. 
D) they produce differentiated goods. 
A) they are large in size. 
B) there are barriers to entry. 
C) there is only one firm in the industry. 
D) they produce differentiated goods.

Question 19

Product differentiation is beneficial because it:

Accepted Answer

A) ensures larger companies can grow while smaller companies fail. 
B) allows the economy to satisfy a wide range of tastes and preferences. 
C) reduces competition in the market. 
D) all of the above 
A) ensures larger companies can grow while smaller companies fail. 
B) allows the economy to satisfy a wide range of tastes and preferences. 
C) reduces competition in the market. 
D) all of the above

Question 20

Recall the application regarding opening a Dunkin' Donuts shop and the small barriers to entering the donut business.What should an owner of a Dunkin' Donut shop expect in a monopolistically competitive market?

Accepted Answer

A) total revenue equal to total cost 
B) keen competition for consumers 
C) his economic profit to be zero 
D) all of the above 
A) total revenue equal to total cost 
B) keen competition for consumers 
C) his economic profit to be zero 
D) all of the above

When products are differentiated by location what kind of tradeoffs exist?

There are patents and regulations that can prevent firms from entering a monopolistically competitive market.

A monopolistically competitive firm influences market price by virtue of its size.

In long-run equilibrium,a monopolistically competitive firm's marginal revenue is equal to its marginal cost.

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

-Refer to Figure 11.2.In the long run the monopolistic competitor would produce ________ units.

-In the long run,the monopolistically competitive firm in Figure 11.3 would generate $ ________ of total revenue.

Firms in monopolistically competitive markets sell identical products.

If there is free entry in a market,then in the long run economic profit will be above average.

Firms in monopolistic competition differentiate their products through:

One key difference between profit maximizing firms in monopolistic competition versus perfect competition is that:

If firms in a monopolistically competitive industry are earning economic profits,then in the long run:

Explain the tradeoffs associated with monopolistic competition relative to monopoly.

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate $________ of total revenue.

Monopolistically competitive firms achieve the degree of market power they command through:

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

In monopolistic competition,firms can have some market power based on the fact that:

Product differentiation is beneficial because it:

Recall the application regarding opening a Dunkin' Donuts shop and the small barriers to entering the donut business.What should an owner of a Dunkin' Donut shop expect in a monopolistically competitive market?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 11: Market Entry and Monopolistic Competition

When products are differentiated by location what kind of tradeoffs exist?

There are patents and regulations that can prevent firms from entering a monopolistically competitive market.

A monopolistically competitive firm influences market price by virtue of its size.

In long-run equilibrium,a monopolistically competitive firm's marginal revenue is equal to its marginal cost.

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

-Refer to Figure 11.2.In the long run the monopolistic competitor would produce ________ units.

-In the long run,the monopolistically competitive firm in Figure 11.3 would generate $ ________ of total revenue.

Firms in monopolistically competitive markets sell identical products.

If there is free entry in a market,then in the long run economic profit will be above average.

Firms in monopolistic competition differentiate their products through:

One key difference between profit maximizing firms in monopolistic competition versus perfect competition is that:

If firms in a monopolistically competitive industry are earning economic profits,then in the long run:

Explain the tradeoffs associated with monopolistic competition relative to monopoly.

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would generate $________ of total revenue.

Monopolistically competitive firms achieve the degree of market power they command through:

Which of the following characteristics is shared by both monopolistically competitive markets and monopoly markets?

In monopolistic competition,firms can have some market power based on the fact that:

Product differentiation is beneficial because it:

Recall the application regarding opening a Dunkin' Donuts shop and the small barriers to entering the donut business.What should an owner of a Dunkin' Donut shop expect in a monopolistically competitive market?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters