Question 1

Describe two features of monopolistic competition that differentiate it from monopoly.

Accepted Answer

First,firms in monopolistic competition

Question 2

-Refer to Figure 11.2.In the long run the monopolistic competitor would charge a price of ________ per unit.

Accepted Answer

A) 0A 
B) 0B 
C) 0F 
D) BA 
A) 0A 
B) 0B 
C) 0F 
D) BA

Question 3

As new firms enter a monopolistically competitive market,existing firms will face a lower average cost of production because the cost is spread across more firms.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following goods are NOT sold in a monopolistically competitive market?

Accepted Answer

A) computer software 
B) toothpaste 
C) toilet paper 
D) oil 
A) computer software 
B) toothpaste 
C) toilet paper 
D) oil

Question 5

-Refer to Figure 11.2.In the long run the monopolistic competitor would earn an economic profit equal to the area:

Accepted Answer

A) 0AFD. 
B) AHE0. 
C) 0BGD. 
D) none of these. 
A) 0AFD. 
B) AHE0. 
C) 0BGD. 
D) none of these.

Question 6

Under monopolistic competition,the typical firm maximizes profit at the point where marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Monopolistically competitive firms can use advertising:

Accepted Answer

A) to lower economies of scale. 
B) to collude against other firms. 
C) to inform consumers about the features of their products. 
D) to increase the price charged for their products. 
A) to lower economies of scale. 
B) to collude against other firms. 
C) to inform consumers about the features of their products. 
D) to increase the price charged for their products.

Question 8

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good sample of differentiation by location?

Accepted Answer

A) gas stations 
B) movie theaters 
C) music stores 
D) restaurants 
A) gas stations 
B) movie theaters 
C) music stores 
D) restaurants

Question 10

Assume that the Indian restaurant industry is monopolistically competitive in London.Garam Masala,an Indian restaurant near Piccadilly Circus,lowers its prices by 10%,but all the other Indian restaurants in London keep their prices unchanged.Which of the following is most likely to occur?

Accepted Answer

A) Garam Masala will not be able to sell any bagels since it was the only bakery to raise its price. 
B) Garam Masala will lose some of its customers. 
C) Garam Masala's profits will increase. 
D) The number of customers served by Garam Masala will increase. 
A) Garam Masala will not be able to sell any bagels since it was the only bakery to raise its price. 
B) Garam Masala will lose some of its customers. 
C) Garam Masala's profits will increase. 
D) The number of customers served by Garam Masala will increase.

Question 11

The condition for long-run equilibrium in a monopolistically competitive industry is:

Accepted Answer

A) price equals average total cost. 
B) price equals marginal cost. 
C) price equals marginal revenue. 
D) marginal cost equals average total cost. 
A) price equals average total cost. 
B) price equals marginal cost. 
C) price equals marginal revenue. 
D) marginal cost equals average total cost.

Question 12

Empirical studies have shown that entry leads to lower prices and profit.

Accepted Answer

A) True 
 B)False

Question 13

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity:

Accepted Answer

A) it will be earning economic profit. 
B) its marginal revenue will exceed its marginal cost. 
C) its price will equal its marginal cost. 
D) its price will be equal to its average total cost. 
A) it will be earning economic profit. 
B) its marginal revenue will exceed its marginal cost. 
C) its price will equal its marginal cost. 
D) its price will be equal to its average total cost.

Question 14

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are:

Accepted Answer

A) large relative to the market. 
B) price takers. 
C) able to block the entry of other firms. 
D) able to differentiate their product. 
A) large relative to the market. 
B) price takers. 
C) able to block the entry of other firms. 
D) able to differentiate their product.

Describe two features of monopolistic competition that differentiate it from monopoly.

-Refer to Figure 11.2.In the long run the monopolistic competitor would charge a price of ________ per unit.

As new firms enter a monopolistically competitive market,existing firms will face a lower average cost of production because the cost is spread across more firms.

Which of the following goods are NOT sold in a monopolistically competitive market?

-Refer to Figure 11.2.In the long run the monopolistic competitor would earn an economic profit equal to the area:

Under monopolistic competition,the typical firm maximizes profit at the point where marginal revenue equals marginal cost.

Monopolistically competitive firms can use advertising:

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good sample of differentiation by location?

Assume that the Indian restaurant industry is monopolistically competitive in London.Garam Masala,an Indian restaurant near Piccadilly Circus,lowers its prices by 10%,but all the other Indian restaurants in London keep their prices unchanged.Which of the following is most likely to occur?

The condition for long-run equilibrium in a monopolistically competitive industry is:

Empirical studies have shown that entry leads to lower prices and profit.

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity:

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are:

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

Describe two features of monopolistic competition that differentiate it from monopoly.

-Refer to Figure 11.2.In the long run the monopolistic competitor would charge a price of ________ per unit.

As new firms enter a monopolistically competitive market,existing firms will face a lower average cost of production because the cost is spread across more firms.

Which of the following goods are NOT sold in a monopolistically competitive market?

-Refer to Figure 11.2.In the long run the monopolistic competitor would earn an economic profit equal to the area:

Under monopolistic competition,the typical firm maximizes profit at the point where marginal revenue equals marginal cost.

Monopolistically competitive firms can use advertising:

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good sample of differentiation by location?

Assume that the Indian restaurant industry is monopolistically competitive in London.Garam Masala,an Indian restaurant near Piccadilly Circus,lowers its prices by 10%,but all the other Indian restaurants in London keep their prices unchanged.Which of the following is most likely to occur?

The condition for long-run equilibrium in a monopolistically competitive industry is:

Empirical studies have shown that entry leads to lower prices and profit.

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity:

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are:

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