Question 1

Critics of advertising argue that advertising

Accepted Answer

A) creates demand for products that people otherwise do not want or need. 
B) lowers barriers to entry into an industry because new firms can more easily establish themselves as competitors. 
C) increases competition by providing information about prices. 
D) encourages monopolization of markets by raising entry barriers. 
A) creates demand for products that people otherwise do not want or need. 
B) lowers barriers to entry into an industry because new firms can more easily establish themselves as competitors. 
C) increases competition by providing information about prices. 
D) encourages monopolization of markets by raising entry barriers.

Question 2

The higher the concentration ratio, the

Accepted Answer

A) more control an individual firm has to set prices. 
B) more competitive the industry. 
C) less competitive the industry. 
D) Both a and c are correct. 
A) more control an individual firm has to set prices. 
B) more competitive the industry. 
C) less competitive the industry. 
D) Both a and c are correct.

Question 3

Under which of the following market structures would consumers likely pay the highest price for a product?

Accepted Answer

A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly 
A) perfect competition 
B) monopolistic competition 
C) oligopoly 
D) monopoly

Question 4

Defenders of advertising

Accepted Answer

A) concede that advertising increases firms' market power. 
B) concede that advertising makes entry by new firms more difficult. 
C) contend that firms use advertising to provide useful information to consumers. 
D) All of the above are correct. 
A) concede that advertising increases firms' market power. 
B) concede that advertising makes entry by new firms more difficult. 
C) contend that firms use advertising to provide useful information to consumers. 
D) All of the above are correct.

Question 5

Scenario 16-8
Burger Bonanza, a major national burger chain, recently decided to spend $4 million on an advertising campaign featuring a world famous actor to promote its new Bomber Burger.
-Refer to Scenario 16-8. What can consumers conclude from Burger Bonanza's willingness to spend $4 million on an advertising campaign?

Accepted Answer

high quali

Question 6

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. What is the maximum amount of profit that Peter can earn per day?

Accepted Answer

The answer of Scenario 16-3
Peter operates an ice cream shop...

Question 7

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Accepted Answer

A) less than 100 units of output. 
B) 100 units of output. 
C) between 100 and 133.33 units of output. 
D) more than 133.33 units of output. 
A) less than 100 units of output. 
B) 100 units of output. 
C) between 100 and 133.33 units of output. 
D) more than 133.33 units of output.

Question 8

Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

Figure 16-2. The figure is drawn for a monopolistically competitive firm.
 
-Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Accepted Answer

A) P=$24, profit=$0 
B) P=$36, profit=$144 
C) P=$36, profit=$48 
D) P=$36, profit=$0 
A) P=$24, profit=$0 
B) P=$36, profit=$144 
C) P=$36, profit=$48 
D) P=$36, profit=$0

Question 10

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Accepted Answer

A) the number of firms in the market decreases. 
B) each existing firm experiences a decrease in demand for its product. 
C) each existing firm experiences a rightward shift of its marginal revenue curve. 
D) each existing firm experiences an upward shift in its average total cost curve. 
A) the number of firms in the market decreases. 
B) each existing firm experiences a decrease in demand for its product. 
C) each existing firm experiences a rightward shift of its marginal revenue curve. 
D) each existing firm experiences an upward shift in its average total cost curve.

Question 11

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.  
-Refer to Table 16-3. What is the concentration ratio for Industry B?

Accepted Answer

A) approximately 46% 
B) approximately 54% 
C) approximately 57% 
D) approximately 61% 
A) approximately 46% 
B) approximately 54% 
C) approximately 57% 
D) approximately 61%

Question 12

Figure 16-2. The figure is drawn for a monopolistically competitive firm.
 
-Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

Accepted Answer

A) Firms will exit this industry. 
B) Firms will enter this industry. 
C) This firm will continue to earn positive economic profits. 
D) This firm will incur losses. 
A) Firms will exit this industry. 
B) Firms will enter this industry. 
C) This firm will continue to earn positive economic profits. 
D) This firm will incur losses.

Question 13

​In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

Accepted Answer

A) True 
 B)False

Question 14

On a vacation to China, you find yourself eating every meal at the local Burger King rather than buying a meal from one of the street vendors. Your traveling companion claims that you are irrational, since you never eat Burger King hamburgers when you are home, and Burger King's hamburgers cost more than the meals prepared and sold by China's street vendors. An economist would most likely explain your behavior by suggesting that

Accepted Answer

A) your behavior is rational, but your friend's behavior is clearly irrational. 
B) you are clearly irrational, but your friend's behavior is rational. 
C) the Burger King brand name suggests consistent quality. 
D) the advertising by Burger King in China is more persuasive than the advertising by Burger King in your home town. 
A) your behavior is rational, but your friend's behavior is clearly irrational. 
B) you are clearly irrational, but your friend's behavior is rational. 
C) the Burger King brand name suggests consistent quality. 
D) the advertising by Burger King in China is more persuasive than the advertising by Burger King in your home town.

Question 15

In monopolistically competitive markets, economic losses

Accepted Answer

A) suggest that some existing firms will exit the market. 
B) suggest that new firms will enter the market. 
C) are minimized through government-imposed barriers to entry. 
D) are never possible. 
A) suggest that some existing firms will exit the market. 
B) suggest that new firms will enter the market. 
C) are minimized through government-imposed barriers to entry. 
D) are never possible.

Question 16

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Accepted Answer

A) True 
 B)False

Question 17

Economists are unanimous in their belief that advertising is socially inefficient.

Accepted Answer

A) True 
 B)False

Question 18

Examples of monopolistically competitive markets include the markets for

Accepted Answer

A) restaurants and furniture. 
B) wheat and corn. 
C) postage stamps and wooden pencils. 
D) All of the above are correct. 
A) restaurants and furniture. 
B) wheat and corn. 
C) postage stamps and wooden pencils. 
D) All of the above are correct.

Question 19

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Accepted Answer

A) True 
 B)False

Question 20

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

Accepted Answer

A) True 
 B)False

Critics of advertising argue that advertising

The higher the concentration ratio, the

Under which of the following market structures would consumers likely pay the highest price for a product?

Defenders of advertising

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. What is the concentration ratio for Industry B?

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

In monopolistically competitive markets, economic losses

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Economists are unanimous in their belief that advertising is socially inefficient.

Examples of monopolistically competitive markets include the markets for

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

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

Critics of advertising argue that advertising

The higher the concentration ratio, the

Under which of the following market structures would consumers likely pay the highest price for a product?

Defenders of advertising

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In order to maximize its profit, the firm will choose to produce

Critics of advertising argue that advertising leads to less elastic demand for products and a larger markup of price over marginal cost.

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. Suppose that average total cost is $36 when Q=24. What is the profit-maximizing price and resulting profit?

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. What is the concentration ratio for Industry B?

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. If the ATC=40 at the profit-maximizing level of output, which of the following will occur in the long run in this industry?

​In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left

In monopolistically competitive markets, economic losses

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Economists are unanimous in their belief that advertising is socially inefficient.

Examples of monopolistically competitive markets include the markets for

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Critics of advertising argue that firms use advertising to manipulate consumers' tastes.

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

In the long run, a monopolistically competitive firm's demand curve becomes more elastic and shifts to the left