Question 1

In perfect competition as well as in monopolistic competition,

Accepted Answer

A) marginal revenue is equal to price for each firm. 
B) profit is positive in a long-run equilibrium for each firm. 
C) entry and exit by firms are restricted. 
D) there are many firms in a single market. 
A) marginal revenue is equal to price for each firm. 
B) profit is positive in a long-run equilibrium for each firm. 
C) entry and exit by firms are restricted. 
D) there are many firms in a single market.

Question 2

Figure 16-14  
-Refer to Figure 16-14. If this firm were operating in a perfectly competitive market, it would charge a price equal to point

Accepted Answer

A) I but in a monopolistically competitive market, the profit-maximizing price is C. 
B) G but in a monopolistically competitive market, the profit-maximizing price is C. 
C) C but in a monopolistically competitive market, the profit-maximizing price is G. 
D) G but in a monopolistically competitive market, the profit-maximizing price is J. 
A) I but in a monopolistically competitive market, the profit-maximizing price is C. 
B) G but in a monopolistically competitive market, the profit-maximizing price is C. 
C) C but in a monopolistically competitive market, the profit-maximizing price is G. 
D) G but in a monopolistically competitive market, the profit-maximizing price is J.

Question 3

Figure 16-14  
-Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Accepted Answer

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

Question 4

Roberto consumes Coke exclusively. He claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in his mouth. In a blind taste test, Roberto is found to prefer Coke to store-brand cola eight out of ten times. The results of Roberto's taste test would refute claims by critics of brand names that

Accepted Answer

A) consumers are always willing to pay more for brand names. 
B) brand names cause consumers to perceive differences that do not really exist. 
C) consumers with the lowest levels of income are the most likely to be influenced by brand name advertising. 
D) brand names are a form of socially efficient advertising. 
A) consumers are always willing to pay more for brand names. 
B) brand names cause consumers to perceive differences that do not really exist. 
C) consumers with the lowest levels of income are the most likely to be influenced by brand name advertising. 
D) brand names are a form of socially efficient advertising.

Question 5

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

Accepted Answer

A) True 
 B)False

Question 6

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Monopolistic competition is an

Accepted Answer

A) efficient market structure because long-run profits are zero. 
B) efficient market structure because each firm produces at its efficient scale. 
C) inefficient market structure because there is deadweight loss. 
D) Both a and b are correct. 
A) efficient market structure because long-run profits are zero. 
B) efficient market structure because each firm produces at its efficient scale. 
C) inefficient market structure because there is deadweight loss. 
D) Both a and b are correct.

Question 8

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Accepted Answer

A) average revenue exceeds marginal revenue 
B) marginal revenue equals marginal cost 
C) price exceeds marginal cost 
D) All of the above are correct. 
A) average revenue exceeds marginal revenue 
B) marginal revenue equals marginal cost 
C) price exceeds marginal cost 
D) All of the above are correct.

Question 9

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Accepted Answer

The answer of Due to free entry and exit in...

Question 10

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York. This is an example of a brand name enhancing market efficiency for U.S. tourists visiting the Philippines.

Accepted Answer

A) True 
 B)False

Question 11

If firms in a monopolistically competitive market are earning positive profits, then

Accepted Answer

A) firms will likely be subject to regulation. 
B) barriers to entry will be strengthened. 
C) some firms will exit the market. 
D) new firms will enter the market. 
A) firms will likely be subject to regulation. 
B) barriers to entry will be strengthened. 
C) some firms will exit the market. 
D) new firms will enter the market.

Question 12

​If a monopolistically competitive firms incurs an increase in fixed costs, its price will rise and its output will fall.

Accepted Answer

A) True 
 B)False

Question 13

In a small college town, four microbreweries have opened in the last two years. Demonstrate the effect of new market entrants on demand for existing firms (microbreweries) that already served this market. Assume that the local community now places a moratorium on new liquor licenses for microbreweries. How will this moratorium affect the long-run profitability of incumbent firms?

Accepted Answer

@#IMG-DLM& The arrival of a new entrant should be

Question 14

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

Accepted Answer

A) oligopoly or perfectly competitive market. 
B) oligopoly or monopoly market. 
C) oligopoly or monopolistically competitive market. 
D) monopoly or monopolistically competitive market. 
A) oligopoly or perfectly competitive market. 
B) oligopoly or monopoly market. 
C) oligopoly or monopolistically competitive market. 
D) monopoly or monopolistically competitive market.

Question 15

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00, while Up and Up (not a brand name) sells for $3.00. Even defenders of brand names would have to admit that

Accepted Answer

A) no rational consumer would spend twice as much for Olay as she would for Up and Up. 
B) the side-by-side presence of these two body washes conveys no useful information to consumers. 
C) Olay has no incentive to maintain the quality of its product just because of the Olay brand name. 
D) None of the above is correct. 
A) no rational consumer would spend twice as much for Olay as she would for Up and Up. 
B) the side-by-side presence of these two body washes conveys no useful information to consumers. 
C) Olay has no incentive to maintain the quality of its product just because of the Olay brand name. 
D) None of the above is correct.

Question 16

Table 16-6
Beatrice's Birthday Cakes is one bakery among many in the market for birthday cakes. The following table presents cost and revenue data for birthday cakes at Beatrice's.  
-Refer to Table 16-6. Suppose the government forced Beatrice's to produce at the efficient scale of output. Who would be better off as a result of this policy? Who would be worse off as a result of this policy?

Accepted Answer

A) Beatrice's would be better off; consumers would be worse off. 
B) Consumers would be better off; Beatrice's would be worse off. 
C) No one would be better off; consumers would be worse off. 
D) No one would be better off; no one would be worse off. 
A) Beatrice's would be better off; consumers would be worse off. 
B) Consumers would be better off; Beatrice's would be worse off. 
C) No one would be better off; consumers would be worse off. 
D) No one would be better off; no one would be worse off.

Question 17

The product-variety externality and the business-stealing externality are both spillover costs of new firms entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 18

For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in

Accepted Answer

A) the short run but not in the long run. 
B) the long run but not in the short run. 
C) both the short run and the long run. 
D) neither the short run nor the long run. 
A) the short run but not in the long run. 
B) the long run but not in the short run. 
C) both the short run and the long run. 
D) neither the short run nor the long run.

Question 19

Table 16-5
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.  
-Refer to Table 16-5. How much profit will this firm earn at the monopolistically competitive price?

Accepted Answer

A) $0 
B) $5 
C) $12 
D) $16 
A) $0 
B) $5 
C) $12 
D) $16

Question 20

In a long-run equilibrium,

Accepted Answer

A) excess capacity applies to monopolistically competitive firms but not to competitive firms. 
B) zero economic profit applies to competitive firms but not to monopolistically competitive firms. 
C) markup over marginal cost applies to both monopolistically competitive and competitive firms. 
D) product variety externalities apply to both perfectly competitive firms and monopolistically competitive firms. 
A) excess capacity applies to monopolistically competitive firms but not to competitive firms. 
B) zero economic profit applies to competitive firms but not to monopolistically competitive firms. 
C) markup over marginal cost applies to both monopolistically competitive and competitive firms. 
D) product variety externalities apply to both perfectly competitive firms and monopolistically competitive firms.

In perfect competition as well as in monopolistic competition,

Figure 16-14 -Refer to Figure 16-14. If this firm were operating in a perfectly competitive market, it would charge a price equal to point

Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

Monopolistic competition is an

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York. This is an example of a brand name enhancing market efficiency for U.S. tourists visiting the Philippines.

If firms in a monopolistically competitive market are earning positive profits, then

If a monopolistically competitive firms incurs an increase in fixed costs, its price will rise and its output will fall.

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00, while Up and Up (not a brand name) sells for $3.00. Even defenders of brand names would have to admit that

The product-variety externality and the business-stealing externality are both spillover costs of new firms entering a monopolistically competitive market.

For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in

Table 16-5 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-5. How much profit will this firm earn at the monopolistically competitive price?

In a long-run equilibrium,

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

Exam 16: Monopolistic Competition

In perfect competition as well as in monopolistic competition,

Figure 16-14 -Refer to Figure 16-14. If this firm were operating in a perfectly competitive market, it would charge a price equal to point

Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

Monopolistic competition is an

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York. This is an example of a brand name enhancing market efficiency for U.S. tourists visiting the Philippines.

If firms in a monopolistically competitive market are earning positive profits, then

​If a monopolistically competitive firms incurs an increase in fixed costs, its price will rise and its output will fall.

Firms in industries that have competitors but do not face so much competition that they are price takers are operating in either a(n)

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00, while Up and Up (not a brand name) sells for $3.00. Even defenders of brand names would have to admit that

The product-variety externality and the business-stealing externality are both spillover costs of new firms entering a monopolistically competitive market.

For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in

Table 16-5 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-5. How much profit will this firm earn at the monopolistically competitive price?

In a long-run equilibrium,

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

If a monopolistically competitive firms incurs an increase in fixed costs, its price will rise and its output will fall.