Exam 14: Monopolistic Competition

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift ________ and the MR curve will shift ________.

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. Suppose La Super Rica maximizes its profit. If La Super Rica's lunch price is greater than its average total cost, which of the following statements is NOT true?

A textbook publisher is in monopolistic competition. If the firm spends nothing on advertising, it can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's total fixed cost is $2,400 a day. Its average variable cost and marginal cost is a constant $20 per book. If the firm spends $1,200 a day on advertising, it can increase the quantity of books sold at each price by 50 percent. Compared to the situation if it does not advertise, if the firm advertises, its economic profit

Brand name aspirin is chemically identical to store brand aspirin. Yet, consumers often prefer the brand name product to the store brand product. This preference is an example of

In the long run, monopolistically competitive firms make zero economic profits because of government regulations.

In monopolistic competition:

The monopolistically competitive firm

In monopolistic competition, excess capacity results from

Which of the following is true regarding the long run for a firm in monopolistic competition?

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make an economic profit in the long run.

In the December edition of Runner's World magazine, Karhu, Adidas, The North Face, and Brooks have full page running shoe advertisements. Which of the following is correct? I. Advertising increases Oris's total cost. II) Advertising increases Oris's fixed costs. III) All the advertising makes the demand curve faced by Oris more elastic.

The efficient scale of a firm is defined as the point where

Which of the following best explains why monopolistically competitive firms face a downward sloping demand curve while perfectly competitive firms do not?

Under monopolistic competition, firms make zero economic profit in the long run and produce at the minimum ATC.

In monopolistic competition, firms can make an economic profit in

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

In monopolistic competition, profit is maximized when the amount produced is such that

The figure shows the demand curve for Nike shoes (D), and Nike's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, Nike maximizes its profit if it sells ________ pairs of shoes per day.

Monopolistically competitive firms engaging in advertising will definitely achieve which of the following?

For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve