Question 1

The marginal revenue curve for a monopolistically competitive firm is ________ that of a perfectly competitive firm and ________ that of a monopolistic firm.

Accepted Answer

A)  flatter than; steeper than 
B)  steeper than; flatter than 
C)  the same as; steeper than 
D)  flatter than; the same as 
A)  flatter than; steeper than 
B)  steeper than; flatter than 
C)  the same as; steeper than 
D)  flatter than; the same as

Question 2

Refer to the information provided in Figure 15.1 below to answer the question(s) that follow. Below are cost curves for Dom's Barber Shop, a monopolistically competitive firm.   Figure 15.1
-Refer to Figure 15.1. If Dom's Barber Shop is maximizing profit, its total revenue equals

Accepted Answer

A)  $200. 
B)  $320. 
C)  $350. 
D)  $360. 
A)  $200. 
B)  $320. 
C)  $350. 
D)  $360.

Question 3

Refer to the information provided in Figure 15.4 below to answer the question(s) that follow.   Figure 15.4
-Refer to Figure 15.4. Assume The Hand Made Shirt Shop has fixed costs of $150 and is a monopolistically competitive firm. If the firm produces 50 personalized sweatshirts in the short run, it will

Accepted Answer

A)  minimize profits. 
B)  minimize losses. 
C)  break even. 
D)  not cover any of its costs. 
A)  minimize profits. 
B)  minimize losses. 
C)  break even. 
D)  not cover any of its costs.

Question 4

Monopolistically competitive firms are unable to affect the market price of their output, but are able to control the price of their own output.

Accepted Answer

A) True 
 B)False

Question 5

If a monopolistically competitive firm is producing an output level where its marginal cost is equal to its marginal revenue but it still earns a loss, then it should always shut down in the short run.

Accepted Answer

A) True 
 B)False

Question 6

Unlike a monopolistically competitive firm's product, a monopolistic firm's product

Accepted Answer

A)  is homogeneous. 
B)  has a vertical demand curve. 
C)  has many close substitutes. 
D)  has no close substitutes. 
A)  is homogeneous. 
B)  has a vertical demand curve. 
C)  has many close substitutes. 
D)  has no close substitutes.

Question 7

Refer to the information provided in Figure 15.2 below to answer the question(s) that follow.   Figure 15.2
-Refer to Figure 15.2. The ________ quantity of perms for We Do Hair, a monopolistically competitive firm, is 40.

Accepted Answer

A)  profit-maximizing 
B)  loss-minimizing 
C)  break-even 
D)  shut down 
A)  profit-maximizing 
B)  loss-minimizing 
C)  break-even 
D)  shut down

Question 8

Refer to the information provided in Figure 15.3 below to answer the question(s) that follow.   Figure 15.3
-Refer to Figure 15.3. In the long run, this monopolistic competitive firm should expect

Accepted Answer

A)  nothing to change; it will continue to make a profit. 
B)  firms to exit the industry and profits to increase. 
C)  firms to enter the industry until all economic profits are eliminated. 
D)  firms to enter the industry and profits to increase. 
A)  nothing to change; it will continue to make a profit. 
B)  firms to exit the industry and profits to increase. 
C)  firms to enter the industry until all economic profits are eliminated. 
D)  firms to enter the industry and profits to increase.

Question 9

Referring to the Economics in Practice on page 320: A successful celebrity endorsement of a product will likely shift the demand curve for the product to the ________, resulting in ________ in the equilibrium price of the item.

Accepted Answer

A)  right; an increase 
B)  right; a decrease 
C)  left; an increase 
D)  left; a decrease 
A)  right; an increase 
B)  right; a decrease 
C)  left; an increase 
D)  left; a decrease

Question 10

In long‐run equilibrium for a monopolistically competitive firm, the firm's demand curve is ________ its average total cost curve.

Accepted Answer

A)  above 
B)  below 
C)  just tangent to 
D)  either above or below 
A)  above 
B)  below 
C)  just tangent to 
D)  either above or below

Question 11

Monopolistically competitive firms prevent the efficient use of resources because in long-run equilibrium,

Accepted Answer

A)  price is less than marginal cost. 
B)  price is greater than marginal cost. 
C)  price equals marginal cost. 
D)  marginal cost is greater than average total cost. 
A)  price is less than marginal cost. 
B)  price is greater than marginal cost. 
C)  price equals marginal cost. 
D)  marginal cost is greater than average total cost.

Question 12

Refer to the information provided in Figure 15.1 below to answer the question(s) that follow. Below are cost curves for Dom's Barber Shop, a monopolistically competitive firm.   Figure 15.1
-Refer to Figure 15.1. The ________ haircut is $16.

Accepted Answer

A)  average total cost of a 
B)  marginal cost of a 
C)  profit from each 
D)  profit-maximizing price for a 
A)  average total cost of a 
B)  marginal cost of a 
C)  profit from each 
D)  profit-maximizing price for a

Question 13

As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will

Accepted Answer

A)  shift to the left and become more elastic because there are now more substitutes for its product. 
B)  shift to the left and become less elastic because there are now more substitutes for its product. 
C)  not be affected because the new firms do not produce a perfect substitute for its product. 
D)  shift to the left, but the elasticity of demand will not be affected. 
A)  shift to the left and become more elastic because there are now more substitutes for its product. 
B)  shift to the left and become less elastic because there are now more substitutes for its product. 
C)  not be affected because the new firms do not produce a perfect substitute for its product. 
D)  shift to the left, but the elasticity of demand will not be affected.

Question 14

The case for product differentiation does not include the fact that

Accepted Answer

A)  products that satisfy a real demand survive. 
B)  standards of living rise with product innovation. 
C)  new products satisfy people with different preferences. 
D)  it wastes society's scarce resources. 
A)  products that satisfy a real demand survive. 
B)  standards of living rise with product innovation. 
C)  new products satisfy people with different preferences. 
D)  it wastes society's scarce resources.

Question 15

The demand facing a monopolistically competitive firm is ________ a monopolistic firm and ________ a perfectly competitive firm.

Accepted Answer

A)  as elastic as; less elastic than 
B)  less elastic than; more elastic than 
C)  more elastic than; less elastic than 
D)  more elastic than; as elastic as 
A)  as elastic as; less elastic than 
B)  less elastic than; more elastic than 
C)  more elastic than; less elastic than 
D)  more elastic than; as elastic as

Question 16

Monopolies can earn positive economic profits in the long run while monopolistically competitive firms cannot due to

Accepted Answer

A)  economies of scale in monopolies but not in monopolistic competition. 
B)  barriers to entry in monopoly but not in monopolistic competition. 
C)  market power of monopolies while monopolistically competitive firms have no market power. 
D)  the less elastic demand faced by monopolies as compared to monopolistically competitive firms. 
A)  economies of scale in monopolies but not in monopolistic competition. 
B)  barriers to entry in monopoly but not in monopolistic competition. 
C)  market power of monopolies while monopolistically competitive firms have no market power. 
D)  the less elastic demand faced by monopolies as compared to monopolistically competitive firms.

Question 17

In monopolistically competitive industries, the market sets the price.

Accepted Answer

A) True 
 B)False

Question 18

The long-run demand curve for a monopolistically competitive firm is horizontal.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the information provided in Figure 15.2 below to answer the question(s) that follow.   Figure 15.2
-Refer to Figure 15.2. If We Do Hair is maximizing profit as a monopolistically competitive firm, it is earning a profit of

Accepted Answer

A)  $180. 
B)  $220. 
C)  $320. 
D)  $480. 
A)  $180. 
B)  $220. 
C)  $320. 
D)  $480.

Question 20

Esmerelda's Egg Emporium is a monopolistically competitive firm. Its marginal revenue curve ________ its demand curve, intersecting the quantity axis ________ the point at which the demand curve intersects it.

Accepted Answer

A)  lies above; midway between the origin and 
B)  is the same as; exactly at 
C)  lies below; midway between the origin and 
D)  lies above; twice as far out as 
A)  lies above; midway between the origin and 
B)  is the same as; exactly at 
C)  lies below; midway between the origin and 
D)  lies above; twice as far out as

Exam 15: Monopolistic Competition

The marginal revenue curve for a monopolistically competitive firm is ________ that of a perfectly competitive firm and ________ that of a monopolistic firm.

Refer to the information provided in Figure 15.1 below to answer the question(s) that follow. Below are cost curves for Dom's Barber Shop, a monopolistically competitive firm. Figure 15.1 -Refer to Figure 15.1. If Dom's Barber Shop is maximizing profit, its total revenue equals

Monopolistically competitive firms are unable to affect the market price of their output, but are able to control the price of their own output.

If a monopolistically competitive firm is producing an output level where its marginal cost is equal to its marginal revenue but it still earns a loss, then it should always shut down in the short run.

Unlike a monopolistically competitive firm's product, a monopolistic firm's product

Refer to the information provided in Figure 15.2 below to answer the question(s) that follow. Figure 15.2 -Refer to Figure 15.2. The ________ quantity of perms for We Do Hair, a monopolistically competitive firm, is 40.

Refer to the information provided in Figure 15.3 below to answer the question(s) that follow. Figure 15.3 -Refer to Figure 15.3. In the long run, this monopolistic competitive firm should expect

Referring to the Economics in Practice on page 320: A successful celebrity endorsement of a product will likely shift the demand curve for the product to the ________, resulting in ________ in the equilibrium price of the item.

In long‐run equilibrium for a monopolistically competitive firm, the firm's demand curve is ________ its average total cost curve.

Monopolistically competitive firms prevent the efficient use of resources because in long-run equilibrium,

Refer to the information provided in Figure 15.1 below to answer the question(s) that follow. Below are cost curves for Dom's Barber Shop, a monopolistically competitive firm. Figure 15.1 -Refer to Figure 15.1. The ________ haircut is $16.

As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will

The case for product differentiation does not include the fact that

The demand facing a monopolistically competitive firm is ________ a monopolistic firm and ________ a perfectly competitive firm.

Monopolies can earn positive economic profits in the long run while monopolistically competitive firms cannot due to

In monopolistically competitive industries, the market sets the price.

The long-run demand curve for a monopolistically competitive firm is horizontal.

Refer to the information provided in Figure 15.2 below to answer the question(s) that follow. Figure 15.2 -Refer to Figure 15.2. If We Do Hair is maximizing profit as a monopolistically competitive firm, it is earning a profit of

Esmerelda's Egg Emporium is a monopolistically competitive firm. Its marginal revenue curve ________ its demand curve, intersecting the quantity axis ________ the point at which the demand curve intersects it.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

The marginal revenue curve for a monopolistically competitive firm is that of a perfectly competitive firm and that of a monopolistic firm.

Referring to the Economics in Practice on page 320: A successful celebrity endorsement of a product will likely shift the demand curve for the product to the , resulting in in the equilibrium price of the item.

The demand facing a monopolistically competitive firm is a monopolistic firm and a perfectly competitive firm.

Esmerelda's Egg Emporium is a monopolistically competitive firm. Its marginal revenue curve its demand curve, intersecting the quantity axis the point at which the demand curve intersects it.