Question 1

Firms in monopolistic competition sell their products at a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

What causes firms to want to enter a monopolistically competitive market?

Accepted Answer

Firms will want to enter any m

Question 3

Monopolistically competitive firms tend to operate on the positively sloped portion of their average cost curves.

Accepted Answer

A) True 
 B)False

Question 4

Positive economic profit encourages new firms to enter an industry.

Accepted Answer

A) True 
 B)False

Question 5

The toothpaste industry with 5 firms is a monopolistic competition,if a sixth firm decides to entry the market,what will happen to firms' specific demand curve?

Accepted Answer

A) shifts to the right 
B) shifts to the left 
C) stays the same 
D) none of the above 
A) shifts to the right 
B) shifts to the left 
C) stays the same 
D) none of the above

Question 6

Which of the following statements is true?

Accepted Answer

A) An assumption of monopolistic competition is that firms can differentiate their products. 
B) An assumption of perfect competition is that firms can differentiate their products. 
C) Monopolistic competition is not subject to free entry and exit. 
D) An assumption of monopolistic competition is that there are only a few large firms in the industry. 
A) An assumption of monopolistic competition is that firms can differentiate their products. 
B) An assumption of perfect competition is that firms can differentiate their products. 
C) Monopolistic competition is not subject to free entry and exit. 
D) An assumption of monopolistic competition is that there are only a few large firms in the industry.

Question 7

Recall the application about satellite vs.cable,how will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Accepted Answer

A) The cable firm improves the quality of service and leaves the price the same. 
B) The cable firm lower the quality of services and lower the price. 
C) The cable firm increases the price without any improvements to its service. 
D) The cable firm improves the quality of service and decreases its price. 
A) The cable firm improves the quality of service and leaves the price the same. 
B) The cable firm lower the quality of services and lower the price. 
C) The cable firm increases the price without any improvements to its service. 
D) The cable firm improves the quality of service and decreases its price.

Question 8

Why does a firm in monopolistic competition face a downward sloping demand curve?

Accepted Answer

Because the firm's product is

Question 9

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

Accepted Answer

If losses are being incurred,firms will

Question 10

The demand for a product of a monopolistically competitive firm is very price inelastic.

Accepted Answer

A) True 
 B)False

Question 11

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

Accepted Answer

A) True 
 B)False

Question 12

Using celebrities and other expensive advertising to advertise a product can signal consumers that the producer expects few repeat customers.

Accepted Answer

A) True 
 B)False

Question 13

Firms gain control over price in monopolistic competition by differentiating their products.

Accepted Answer

A) True 
 B)False

Question 14

As new firms enter an industry the existing firms will decrease their output.

Accepted Answer

A) True 
 B)False

Question 15

Recall the application about opening a Dunkin' Donuts shop and the small barriers to entering the donut business.Which of the following is NOT required to operate a Dunkin' Donuts franchise?

Accepted Answer

A) paying a franchise fee 
B) earning an economic profit 
C) paying a royalty rate on profits 
D) selling a specific brand of donuts 
A) paying a franchise fee 
B) earning an economic profit 
C) paying a royalty rate on profits 
D) selling a specific brand of donuts

Question 16

Under a monopolistically competitive market structure,firms will continue to enter the market until the economic profit is eliminated.

Accepted Answer

A) True 
 B)False

Question 17

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce ________ units and charge ________ per unit.

Accepted Answer

A) 7;$50 
B) 10;$48 
C) 11;$48 
D) 10;$45 
A) 7;$50 
B) 10;$48 
C) 11;$48 
D) 10;$45

Question 18

In the short run in monopolistic competition there can be:

Accepted Answer

A) economic profits,but not losses. 
B) economic profits,losses or break even. 
C) no economic profits,but losses 
D) no economic profits or losses. 
A) economic profits,but not losses. 
B) economic profits,losses or break even. 
C) no economic profits,but losses 
D) no economic profits or losses.

Question 19

-In the long run,the monopolistically competitive firm in Figure 11.3 would produce ________ units and charge ________ per unit.

Accepted Answer

A) 7;$50 
B) 10;$48 
C) 11;$48 
D) 10;$45 
A) 7;$50 
B) 10;$48 
C) 11;$48 
D) 10;$45

Question 20

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

Accepted Answer

A) True 
 B)False

Firms in monopolistic competition sell their products at a price equal to marginal cost.

What causes firms to want to enter a monopolistically competitive market?

Monopolistically competitive firms tend to operate on the positively sloped portion of their average cost curves.

Positive economic profit encourages new firms to enter an industry.

The toothpaste industry with 5 firms is a monopolistic competition,if a sixth firm decides to entry the market,what will happen to firms' specific demand curve?

Which of the following statements is true?

Recall the application about satellite vs.cable,how will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Why does a firm in monopolistic competition face a downward sloping demand curve?

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

The demand for a product of a monopolistically competitive firm is very price inelastic.

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

Using celebrities and other expensive advertising to advertise a product can signal consumers that the producer expects few repeat customers.

Firms gain control over price in monopolistic competition by differentiating their products.

As new firms enter an industry the existing firms will decrease their output.

Recall the application about opening a Dunkin' Donuts shop and the small barriers to entering the donut business.Which of the following is NOT required to operate a Dunkin' Donuts franchise?

Under a monopolistically competitive market structure,firms will continue to enter the market until the economic profit is eliminated.

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce units and charge per unit.

In the short run in monopolistic competition there can be:

-In the long run,the monopolistically competitive firm in Figure 11.3 would produce units and charge per unit.

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

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

Firms in monopolistic competition sell their products at a price equal to marginal cost.

What causes firms to want to enter a monopolistically competitive market?

Monopolistically competitive firms tend to operate on the positively sloped portion of their average cost curves.

Positive economic profit encourages new firms to enter an industry.

The toothpaste industry with 5 firms is a monopolistic competition,if a sixth firm decides to entry the market,what will happen to firms' specific demand curve?

Which of the following statements is true?

Recall the application about satellite vs.cable,how will an existing cable-TV provider respond in most cases to the entry of a firm that provides TV signals via satellite?

Why does a firm in monopolistic competition face a downward sloping demand curve?

Explain the process by which long-run equilibrium will be achieved in a monopolistically competitive industry if some firms are incurring losses.

The demand for a product of a monopolistically competitive firm is very price inelastic.

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

Using celebrities and other expensive advertising to advertise a product can signal consumers that the producer expects few repeat customers.

Firms gain control over price in monopolistic competition by differentiating their products.

As new firms enter an industry the existing firms will decrease their output.

Recall the application about opening a Dunkin' Donuts shop and the small barriers to entering the donut business.Which of the following is NOT required to operate a Dunkin' Donuts franchise?

Under a monopolistically competitive market structure,firms will continue to enter the market until the economic profit is eliminated.

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce ________ units and charge ________ per unit.

In the short run in monopolistic competition there can be:

-In the long run,the monopolistically competitive firm in Figure 11.3 would produce ________ units and charge ________ per unit.

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

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

-In the long run,a perfectly competitive firm facing the same costs as in Figure 11.3 would produce units and charge per unit.

-In the long run,the monopolistically competitive firm in Figure 11.3 would produce units and charge per unit.