Question 1

Figure 16-10
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-10. When the firm is maximizing its profit,

Accepted Answer

A) TR = $9,000 and TC =$16,000. 
B) TR = $14,000 and TC =$16,000. 
C) TR = $16,000 and TC =$16,000. 
D) MC exceeds MR by $66.66 on the last unit of output produced. 
A) TR = $9,000 and TC =$16,000. 
B) TR = $14,000 and TC =$16,000. 
C) TR = $16,000 and TC =$16,000. 
D) MC exceeds MR by $66.66 on the last unit of output produced.

Question 2

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this market?

Accepted Answer

A) $60 
B) $70 
C) $75 
D) $80 
A) $60 
B) $70 
C) $75 
D) $80

Question 3

Figure 16-14  
-Refer to Figure 16-14. Use the letters to identify the deadweight loss from this firm producing at its profit-maximizing level of output.

Accepted Answer

The answer of Figure 16-14  
-Refer to Figure 16-14....

Question 4

The product-variety externality arises in monopolistically competitive markets because

Accepted Answer

A) firms produce with excess capacity. 
B) firms try to differentiate their products. 
C) firms would like to produce homogeneous products, but the large number of firms prohibits it. 
D) entry and exit is restricted. 
A) firms produce with excess capacity. 
B) firms try to differentiate their products. 
C) firms would like to produce homogeneous products, but the large number of firms prohibits it. 
D) entry and exit is restricted.

Question 5

For a monopolistically competitive firm,

Accepted Answer

A) marginal revenue and price are the same. 
B) average revenue and price are the same. 
C) at the profit-maximizing quantity of output, price equals marginal cost. 
D) at the profit-maximizing quantity of output, price equals the minimum of average total cost. 
A) marginal revenue and price are the same. 
B) average revenue and price are the same. 
C) at the profit-maximizing quantity of output, price equals marginal cost. 
D) at the profit-maximizing quantity of output, price equals the minimum of average total cost.

Question 6

Figure 16-4  
-Refer to Figure 16-4. What price will the monopolistically competitive firm charge in this market?

Accepted Answer

A) $400 
B) $600 
C) $700 
D) $800 
A) $400 
B) $600 
C) $700 
D) $800

Question 7

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Accepted Answer

Because its product

Question 8

Figure 16-13  
-Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Accepted Answer

The answer of Figure 16-13  
-Refer to Figure 16-13....

Question 9

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.  
-Refer to Table 16-1. Which industry has the highest concentration ratio?

Accepted Answer

A) Industry A 
B) Industry B 
C) Industry C 
D) Industry D 
A) Industry A 
B) Industry B 
C) Industry C 
D) Industry D

Question 10

Which market structure(s) is(are) imperfectly competitive?

Accepted Answer

oligopoly

Question 11

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Accepted Answer

A) firms would respond by lowering their costs. 
B) firms would require a subsidy to stay in business 
C) new firms that enter the market would operate at efficient scale. 
D) the most efficient firms would not be affected. 
A) firms would respond by lowering their costs. 
B) firms would require a subsidy to stay in business 
C) new firms that enter the market would operate at efficient scale. 
D) the most efficient firms would not be affected.

Question 12

Figure 16-6  
-Refer to Figure 16-6. Which of the graphs depicts a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A) panel a 
B) panel b 
C) panel c 
D) None of the above is correct. 
A) panel a 
B) panel b 
C) panel c 
D) None of the above is correct.

Question 13

Figure 16-5  
-Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Accepted Answer

A) panel a 
B) panel b 
C) panel c 
D) panel d 
A) panel a 
B) panel b 
C) panel c 
D) panel d

Question 14

Figure 16-14  
-Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Accepted Answer

A) ABC 
B) IJK 
C) BHJ 
D) BCIJ 
A) ABC 
B) IJK 
C) BHJ 
D) BCIJ

Question 15

Professional organizations (for example, the American Medical Association and the American Bar Association) have been active advocates for regulation to restrict the right of professionals to advertise. Describe what economic incentives might exist for existing professionals to restrict advertising.

Accepted Answer

If advertising increases information abo

Question 16

A monopolistically competitive firm has the following cost structure:   The firm faces the following demand curve:   If the government forces this firm to produce at its efficient scale, it will

Accepted Answer

A) produce 3 units and make $9. 
B) produce 4 units and make $6. 
C) produce 5 units and lose $5. 
D) produce 7 units and lose $49. 
A) produce 3 units and make $9. 
B) produce 4 units and make $6. 
C) produce 5 units and lose $5. 
D) produce 7 units and lose $49.

Question 17

​Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect:

Accepted Answer

A) ​The price to fall and output to rise 
B) ​The price to fall and output to fall 
C) ​The price to rise and output to rise 
D) ​The price to rise and output to fall 
A) ​The price to fall and output to rise 
B) ​The price to fall and output to fall 
C) ​The price to rise and output to rise 
D) ​The price to rise and output to fall

Question 18

Figure 16-14  
-Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Accepted Answer

A) ABC 
B) IJK 
C) BHJ 
D) BCIJ 
A) ABC 
B) IJK 
C) BHJ 
D) BCIJ

Question 19

Which of the following is a characteristic of monopolistic competition?

Accepted Answer

A) ownership of a key resource by a single firm 
B) free entry 
C) identical product 
D) patents 
A) ownership of a key resource by a single firm 
B) free entry 
C) identical product 
D) patents

Question 20

As firms exit a monopolistically competitive market, profits of remaining firms

Accepted Answer

A) decline, and product diversity in the market decreases. 
B) decline, and product diversity in the market increases. 
C) rise, and product diversity in the market decreases. 
D) rise, and product diversity in the market increases. 
A) decline, and product diversity in the market decreases. 
B) decline, and product diversity in the market increases. 
C) rise, and product diversity in the market decreases. 
D) rise, and product diversity in the market increases.

Exam 16: Monopolistic Competition

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. When the firm is maximizing its profit,

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this market?

Figure 16-14 -Refer to Figure 16-14. Use the letters to identify the deadweight loss from this firm producing at its profit-maximizing level of output.

The product-variety externality arises in monopolistically competitive markets because

For a monopolistically competitive firm,

Figure 16-4 -Refer to Figure 16-4. What price will the monopolistically competitive firm charge in this market?

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. Which industry has the highest concentration ratio?

Which market structure(s) is(are) imperfectly competitive?

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Figure 16-6 -Refer to Figure 16-6. Which of the graphs depicts a monopolistically competitive firm in long-run equilibrium?

Figure 16-5 -Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Figure 16-14 -Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: If the government forces this firm to produce at its efficient scale, it will

​Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect:

Figure 16-14 -Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Which of the following is a characteristic of monopolistic competition?

As firms exit a monopolistically competitive market, profits of remaining firms

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

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Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect: