Question 1

Refer to the graph shown. To maximize profit, the monopolistically competitive firm represented in this graph will produce:

Accepted Answer

A)  Q1 and set price equal to P1. 
B)  Q1 and set price equal to P3. 
C)  Q1 and set price equal to P4. 
D)  Q2 and set price equal to P2. 
A)  Q1 and set price equal to P1. 
B)  Q1 and set price equal to P3. 
C)  Q1 and set price equal to P4. 
D)  Q2 and set price equal to P2.

Question 2

It makes sense for Wendy's to advertise its new menu that allows customers to choose fruit or salad as a substitute for French fries in its values meals, as long as doing so raises:

Accepted Answer

A)  revenue by more than it raises the cost of advertising. 
B)  any revenue at all. 
C)  costs. 
D)  revenue by less than the cost of advertising. 
A)  revenue by more than it raises the cost of advertising. 
B)  any revenue at all. 
C)  costs. 
D)  revenue by less than the cost of advertising.

Question 3

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the equation for marginal revenue is:

Accepted Answer

A)  MR = 50Q - (1/5)Q2. 
B)  MR = 50Q - (1/10)Q2. 
C)  MR = 50 - (1/5)Q. 
D)  MR = 50 - (1/10)Q. 
A)  MR = 50Q - (1/5)Q2. 
B)  MR = 50Q - (1/10)Q2. 
C)  MR = 50 - (1/5)Q. 
D)  MR = 50 - (1/10)Q.

Question 4

If the market for tires is monopolistically competitive:

Accepted Answer

A)  the demand curve for each seller's product is perfectly elastic. 
B)  no seller can control the price of the product. 
C)  sellers can influence the market price of the product. 
D)  no firm has any monopoly power. 
A)  the demand curve for each seller's product is perfectly elastic. 
B)  no seller can control the price of the product. 
C)  sellers can influence the market price of the product. 
D)  no firm has any monopoly power.

Question 5

In the long-run equilibrium for a monopolistically competitive firm, price:

Accepted Answer

A)  exceeds marginal cost. 
B)  exceeds average total cost. 
C)  is equal to marginal revenue. 
D)  is equal to marginal cost. 
A)  exceeds marginal cost. 
B)  exceeds average total cost. 
C)  is equal to marginal revenue. 
D)  is equal to marginal cost.

Question 6

Under monopolistic competition:

Accepted Answer

A)  firms can sell all the output they wish without affecting the price. 
B)  firms face a downward-sloping demand curve. 
C)  firms have no monopoly power. 
D)  a single seller serves the market. 
A)  firms can sell all the output they wish without affecting the price. 
B)  firms face a downward-sloping demand curve. 
C)  firms have no monopoly power. 
D)  a single seller serves the market.

Question 7

If a monopolist can price discriminate among buyers, it will charge buyers with more elastic demands a higher price.

Accepted Answer

A) True 
 B)False

Question 8

If P = Q/15 represents market supply for a competitive industry and market demand is given by Qd = 500 - 10P, the equilibrium price is:

Accepted Answer

A)  $12.50. 
B)  $20.00. 
C)  $31.25. 
D)  $50.00. 
A)  $12.50. 
B)  $20.00. 
C)  $31.25. 
D)  $50.00.

Question 9

Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:

Accepted Answer

A)  output will remain at 100 but price will rise to $6. 
B)  price will remain at $6 but output will fall by 100. 
C)  price will remain at $4 but output will fall by 100. 
D)  price will rise to $6 and output will fall by 100. 
A)  output will remain at 100 but price will rise to $6. 
B)  price will remain at $6 but output will fall by 100. 
C)  price will remain at $4 but output will fall by 100. 
D)  price will rise to $6 and output will fall by 100.

Question 10

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

Accepted Answer

A)  public goods. 
B)  nonrival goods. 
C)  economies of scope. 
D)  a network externality. 
A)  public goods. 
B)  nonrival goods. 
C)  economies of scope. 
D)  a network externality.

Question 11

For a monopolistic competitor:

Accepted Answer

A)  P = ATC in long-run equilibrium. 
B)  P > ATC in long-run equilibrium. 
C)  P = MR in long-run equilibrium. 
D)  P = MC in long-run equilibrium. 
A)  P = ATC in long-run equilibrium. 
B)  P > ATC in long-run equilibrium. 
C)  P = MR in long-run equilibrium. 
D)  P = MC in long-run equilibrium.

Refer to the graph shown. To maximize profit, the monopolistically competitive firm represented in this graph will produce:

It makes sense for Wendy's to advertise its new menu that allows customers to choose fruit or salad as a substitute for French fries in its values meals, as long as doing so raises:

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Q_d = 500 - 10P, the equation for marginal revenue is:

If the market for tires is monopolistically competitive:

In the long-run equilibrium for a monopolistically competitive firm, price:

Under monopolistic competition:

If a monopolist can price discriminate among buyers, it will charge buyers with more elastic demands a higher price.

If P = Q/15 represents market supply for a competitive industry and market demand is given by Q_d = 500 - 10P, the equilibrium price is:

Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

For a monopolistic competitor:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Exam 14: Monopoly and Monopolistic Competition

Refer to the graph shown. To maximize profit, the monopolistically competitive firm represented in this graph will produce:

It makes sense for Wendy's to advertise its new menu that allows customers to choose fruit or salad as a substitute for French fries in its values meals, as long as doing so raises:

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Qd = 500 - 10P, the equation for marginal revenue is:

If the market for tires is monopolistically competitive:

In the long-run equilibrium for a monopolistically competitive firm, price:

Under monopolistic competition:

If a monopolist can price discriminate among buyers, it will charge buyers with more elastic demands a higher price.

If P = Q/15 represents market supply for a competitive industry and market demand is given by Qd = 500 - 10P, the equilibrium price is:

Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

For a monopolistic competitor:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Q_d = 500 - 10P, the equation for marginal revenue is:

If P = Q/15 represents market supply for a competitive industry and market demand is given by Q_d = 500 - 10P, the equilibrium price is: