Question 1

The product-variety externality is associated with the

Accepted Answer

A) producer surplus that accrues to incumbent firms in a monopolistically competitive industry. 
B) loss of consumer surplus from exposure to additional advertising. 
C) consumer surplus that is generated from the introduction of a new product. 
D) opportunity cost of firms exiting a monopolistically competitive industry. 
A) producer surplus that accrues to incumbent firms in a monopolistically competitive industry. 
B) loss of consumer surplus from exposure to additional advertising. 
C) consumer surplus that is generated from the introduction of a new product. 
D) opportunity cost of firms exiting a monopolistically competitive industry.

Question 2

Figure 16-2. The figure is drawn for a monopolistically competitive firm.
 
-Refer to Figure 16-2. Suppose ATC = $36 when Q = 24. Then the

Accepted Answer

A) firm is in a long-run equilibrium when it produces 24 units of output. 
B) firm is in a long-run equilibrium when it produces 32 units of output. 
C) best the firm can do is sustain a loss of $48. 
D) best the firm can do is earn a profit of $96. 
A) firm is in a long-run equilibrium when it produces 24 units of output. 
B) firm is in a long-run equilibrium when it produces 32 units of output. 
C) best the firm can do is sustain a loss of $48. 
D) best the firm can do is earn a profit of $96.

Question 3

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. What is the concentration ratio in Industry B?

Accepted Answer

A) 18% 
B) 34% 
C) 61% 
D) 95% 
A) 18% 
B) 34% 
C) 61% 
D) 95%

Question 4

The debate over the efficiency of markets in which products with brand names are sold

Accepted Answer

A) is framed by the role of regulation in advertising. 
B) is likely to be resolved by reference to anecdotal evidence. 
C) hinges on whether consumers are rational in their choices. 
D) hinges on the effectiveness of advertising that identifies price differences. 
A) is framed by the role of regulation in advertising. 
B) is likely to be resolved by reference to anecdotal evidence. 
C) hinges on whether consumers are rational in their choices. 
D) hinges on the effectiveness of advertising that identifies price differences.

Question 5

Figure 16-14  
-Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Accepted Answer

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

Question 6

Figure 16-12  
-Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Accepted Answer

The answer of Figure 16-12  
-Refer to Figure 16-12....

Question 7

Advertisements that appear to convey no information at all

Accepted Answer

A) are usually associated with "infomercials." 
B) are useless to consumers but valuable to firms. 
C) are useless to firms but valuable to consumers for their entertainment quality alone. 
D) may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise. 
A) are usually associated with "infomercials." 
B) are useless to consumers but valuable to firms. 
C) are useless to firms but valuable to consumers for their entertainment quality alone. 
D) may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise.

Question 8

Which of the following statements is not correct?

Accepted Answer

A) Critics of advertising argue that firms advertise to manipulate consumers' tastes. 
B) Defenders of advertising argue that advertising provides valuable product information to consumers. 
C) An industry with many brand name products will be more competitive than one with many generic products. 
D) The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product. 
A) Critics of advertising argue that firms advertise to manipulate consumers' tastes. 
B) Defenders of advertising argue that advertising provides valuable product information to consumers. 
C) An industry with many brand name products will be more competitive than one with many generic products. 
D) The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product.

Question 9

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. The quantity of output at which the MC and ATC curves cross is the

Accepted Answer

A) efficient scale of the firm. 
B) short-run equilibrium quantity of output for the firm. 
C) long-run equilibrium quantity of output for the firm. 
D) All of the above are correct. 
A) efficient scale of the firm. 
B) short-run equilibrium quantity of output for the firm. 
C) long-run equilibrium quantity of output for the firm. 
D) All of the above are correct.

Question 10

Figure 16-11  
-Refer to Figure 16-11. If this firm profit-maximizes, how much output will it produce?

Accepted Answer

The answer of Figure 16-11  
-Refer to Figure 16-11....

Question 11

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. How much output will the monopolistically competitive firm produce in this situation?

Accepted Answer

A) 20 units 
B) 25 units 
C) 40 units 
D) 80 units 
A) 20 units 
B) 25 units 
C) 40 units 
D) 80 units

Question 12

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20.  
-Refer to Table 16-7. If this firm profit maximizes and faces a constant marginal cost of $7, does it have excess capacity? How do you know?

Accepted Answer

Yes, avera

Question 13

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 lowest 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 14

Which of the following market structures results in a deadweight loss in the long run? ​

Accepted Answer

A) ​Perfect competition and monopolistic competition 
B) Monopolistic competition and monopoly 
C) ​Perfect competition and monopoly 
D) ​All of these market structures lead to a deadweight loss in the long run 
A) ​Perfect competition and monopolistic competition 
B) Monopolistic competition and monopoly 
C) ​Perfect competition and monopoly 
D) ​All of these market structures lead to a deadweight loss in the long run

Question 15

Figure 16-11  
-Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Accepted Answer

firms will enter
pri

Question 16

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20.  
-Refer to Table 16-7. If this firm has a constant marginal cost of $7, what is the profit-maximizing level of output?

Accepted Answer

The answer of Table 16-7
A monopolistically competitive firm faces the...

Question 17

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.  
-Refer to Table 16-4. At the profit-maximizing level of output, what is this firm's total cost?

Accepted Answer

A) $10 
B) $40 
C) $88 
D) $100 
A) $10 
B) $40 
C) $88 
D) $100

Question 18

Figure 16-12  
-Refer to Figure 16-12. How much cost per unit could this firm save by producing the efficient level of output rather than the profit-maximizing level of output?

Accepted Answer

A) $0 
B) $1 
C) $2 
D) $3 
A) $0 
B) $1 
C) $2 
D) $3

Question 19

Scenario 16-3
Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.)  
-Refer to Scenario 16-3. How much profit will Peter earn each day if he chooses the price and quantity that maximize his profit?

Accepted Answer

A) $176 
B) $208 
C) $225 
D) $352 
A) $176 
B) $208 
C) $225 
D) $352

Question 20

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Accepted Answer

Monopolistically competitive f

Exam 16: Monopolistic Competition

The product-variety externality is associated with the

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose ATC = $36 when Q = 24. Then the

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. What is the concentration ratio in Industry B?

The debate over the efficiency of markets in which products with brand names are sold

Figure 16-14 -Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Figure 16-12 -Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Advertisements that appear to convey no information at all

Which of the following statements is not correct?

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The quantity of output at which the MC and ATC curves cross is the

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much output will it produce?

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. How much output will the monopolistically competitive firm produce in this situation?

Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. -Refer to Table 16-7. If this firm profit maximizes and faces a constant marginal cost of $7, does it have excess capacity? How do you know?

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 lowest concentration ratio?

Which of the following market structures results in a deadweight loss in the long run? ​

Figure 16-11 -Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. -Refer to Table 16-7. If this firm has a constant marginal cost of $7, what is the profit-maximizing level of output?

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4. At the profit-maximizing level of output, what is this firm's total cost?

Figure 16-12 -Refer to Figure 16-12. How much cost per unit could this firm save by producing the efficient level of output rather than the profit-maximizing level of output?

What is meant by the term "excess capacity" as it relates to monopolistically competitive 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

Filters

Which of the following market structures results in a deadweight loss in the long run?