Question 1

Product variety and information for consumers are gains from

Accepted Answer

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

Question 2

A monopolistically competitive firm is like a monopoly firm insofar as

Accepted Answer

A)  both face perfectly elastic demand. 
B)  both earn an economic profit in the long run. 
C)  both have MR curves that lie below their demand curves. 
D)  neither is protected by high barriers to entry. 
A)  both face perfectly elastic demand. 
B)  both earn an economic profit in the long run. 
C)  both have MR curves that lie below their demand curves. 
D)  neither is protected by high barriers to entry.

Question 3

Monopolistic competition and perfect competition share all of the following EXCEPT

Accepted Answer

A)  the type of good they sell. 
B)  free entry and exit. 
C)  a large number of firms. 
D)  price competition among firms. 
A)  the type of good they sell. 
B)  free entry and exit. 
C)  a large number of firms. 
D)  price competition among firms.

Question 4

In the long run, a firm in a monopolistically competitive industry produces where its marginal cost

Accepted Answer

A)  is less than its average cost. 
B)  equals its average cost. 
C)  exceeds its average cost. 
D)  equals its price. 
A)  is less than its average cost. 
B)  equals its average cost. 
C)  exceeds its average cost. 
D)  equals its price.

Question 5

In its long-run equilibrium, a firm in monopolistic competition

Accepted Answer

A)  makes zero economic profit and operates with excess capacity. 
B)  makes zero economic profit and produces above capacity output. 
C)  makes a positive economic profit and operates with excess capacity. 
D)  makes a positive economic profit and produces above capacity output. 
A)  makes zero economic profit and operates with excess capacity. 
B)  makes zero economic profit and produces above capacity output. 
C)  makes a positive economic profit and operates with excess capacity. 
D)  makes a positive economic profit and produces above capacity output.

Question 6

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Accepted Answer

A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases 
A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases

Question 7

Firms in monopolistic competition can achieve product differentiation by

Accepted Answer

A)  expanding plant size. 
B)  exploiting economies of scale in production. 
C)  advertising special characteristics. 
D)  setting the price equal to average revenue. 
A)  expanding plant size. 
B)  exploiting economies of scale in production. 
C)  advertising special characteristics. 
D)  setting the price equal to average revenue.

Question 8

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct. In m

Question 9

Which of the following statements is correct for a monopolistically competitive firm in the short run?

Accepted Answer

A)  Its total revenue is maximized. 
B)  Its total fixed cost is 0. 
C)  Its marginal cost is equal to its marginal revenue. 
D)  Its price is equal to its marginal cost. 
A)  Its total revenue is maximized. 
B)  Its total fixed cost is 0. 
C)  Its marginal cost is equal to its marginal revenue. 
D)  Its price is equal to its marginal cost.

Question 10

A firm is said to have excess capacity when it produces the amount of output

Accepted Answer

A)  such that price is greater than marginal cost. 
B)  such that marginal revenue is greater than marginal cost. 
C)  smaller than that which minimizes average total cost. 
D)  larger than that which minimizes average total cost. 
A)  such that price is greater than marginal cost. 
B)  such that marginal revenue is greater than marginal cost. 
C)  smaller than that which minimizes average total cost. 
D)  larger than that which minimizes average total cost.

Question 11

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the short-run profit maximizing quantity, J Brand's ATC was $180 and AVC was $100, which statement is true?

Accepted Answer

A)  J Brand will produce in the short and long run. 
B)  J Brand will produce in the short run but go out of business in the long run. 
C)  J Brand will shut down in the short run and go out of business in the long run. 
D)  J Brand will produce in the short run and shut down in the long run. 
A)  J Brand will produce in the short and long run. 
B)  J Brand will produce in the short run but go out of business in the long run. 
C)  J Brand will shut down in the short run and go out of business in the long run. 
D)  J Brand will produce in the short run and shut down in the long run.

Question 12

A monopolistically competitive firm has excess capacity because in the

Accepted Answer

A)  short run its MR exceeds its MC. 
B)  short run its ATC is less than its AVC. 
C)  long run its ATC exceeds its minimum ATC. 
D)  long run it makes an economic profit. 
A)  short run its MR exceeds its MC. 
B)  short run its ATC is less than its AVC. 
C)  long run its ATC exceeds its minimum ATC. 
D)  long run it makes an economic profit.

Question 13

-In the above figure, the firm is a monopolistically competitive firm. In the long run, its economic profit will be

Accepted Answer

A)  zero. 
B)  between zero and $50 per day. 
C)  greater than $50 per day. 
D)  some amount that cannot be determined without more information. 
A)  zero. 
B)  between zero and $50 per day. 
C)  greater than $50 per day. 
D)  some amount that cannot be determined without more information.

Question 14

In the long run, monopolistically competitive firms are ________ to perfectly competitive firms because ________.

Accepted Answer

A)  similar; both firms produce at the minimum ATC 
B)  similar; both firms make zero economic profit 
C)  not similar; monopolistically competitive firms set P = MC to maximize profits 
D)  not similar; monopolistically competitive firms can make an economic profit and perfectly competitive firms cannot 
A)  similar; both firms produce at the minimum ATC 
B)  similar; both firms make zero economic profit 
C)  not similar; monopolistically competitive firms set P = MC to maximize profits 
D)  not similar; monopolistically competitive firms can make an economic profit and perfectly competitive firms cannot

Question 15

-In the figure above, assuming that the firm does not shut down, it will charge a price of

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 16

In the short run, a firm in monopolistic competition produces where

Accepted Answer

A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC. 
A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC.

Question 17

Monopolistic competition is a market structure in which:

Accepted Answer

A)  A large number of firms compete. 
B)  Firms produce identical products. 
C)  Firms compete only on product price. 
D)  Natural or legal barriers prevent the entry of new firms. 
A)  A large number of firms compete. 
B)  Firms produce identical products. 
C)  Firms compete only on product price. 
D)  Natural or legal barriers prevent the entry of new firms.

Question 18

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).
-In the figure above, the market for jackets ________ in long-run equilibrium, and there is ________ for new firms to enter.

Accepted Answer

A)  is; no incentive 
B)  is; an incentive 
C)  is not; an incentive 
D)  is not; no incentive 
A)  is; no incentive 
B)  is; an incentive 
C)  is not; an incentive 
D)  is not; no incentive

Question 19

In the long-run, a firm in monopolistic competition has

Accepted Answer

A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price. 
A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price.

Question 20

A textbook publisher is in monopolistic competition. The firm 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. What is the firm's maximum economic profit?

Accepted Answer

A)  zero 
B)  $800 
C)  -$400 
D)  $1,000 
A)  zero 
B)  $800 
C)  -$400 
D)  $1,000

Exam 14: Monopolistic Competition

Product variety and information for consumers are gains from

A monopolistically competitive firm is like a monopoly firm insofar as

Monopolistic competition and perfect competition share all of the following EXCEPT

In the long run, a firm in a monopolistically competitive industry produces where its marginal cost

In its long-run equilibrium, a firm in monopolistic competition

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Firms in monopolistic competition can achieve product differentiation by

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

Which of the following statements is correct for a monopolistically competitive firm in the short run?

A firm is said to have excess capacity when it produces the amount of output

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the short-run profit maximizing quantity, J Brand's ATC was $180 and AVC was $100, which statement is true?

A monopolistically competitive firm has excess capacity because in the

-In the above figure, the firm is a monopolistically competitive firm. In the long run, its economic profit will be

In the long run, monopolistically competitive firms are ________ to perfectly competitive firms because ________.

-In the figure above, assuming that the firm does not shut down, it will charge a price of

In the short run, a firm in monopolistic competition produces where

Monopolistic competition is a market structure in which:

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, the market for jackets ________ in long-run equilibrium, and there is ________ for new firms to enter.

In the long-run, a firm in monopolistic competition has

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts , the marginal curve shifts , and the profit-maximizing quantity .

In the long run, monopolistically competitive firms are to perfectly competitive firms because .

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, the market for jackets in long-run equilibrium, and there is for new firms to enter.