Question 1

One characteristic of an oligopoly market structure is:

Accepted Answer

A) firms in the industry are typically characterized by very diverse product lines. 
B) firms in the industry have some degree of market power. 
C) products typically sell at a price equal to their marginal cost of production. 
D) the actions of one seller have no impact on the profitability of other sellers. 
A) firms in the industry are typically characterized by very diverse product lines. 
B) firms in the industry have some degree of market power. 
C) products typically sell at a price equal to their marginal cost of production. 
D) the actions of one seller have no impact on the profitability of other sellers.

Question 2

Scenario 16-2
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

Accepted Answer

A) 10 
B) 20 
C) 50 
D) 100 
A) 10 
B) 20 
C) 50 
D) 100

Question 3

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. When Peter maximizes his profits, what is his total cost per day?

Accepted Answer

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

Question 4

Edward Chamberlin argued that brand names

Accepted Answer

A) hampered market efficiency. 
B) were instrumental in enhancing market efficiency. 
C) were useful in enhancing market efficiency when the government enforced the use of exclusive trademarks. 
D) were likely to be more socially efficient when used in conjunction with advertising. 
A) hampered market efficiency. 
B) were instrumental in enhancing market efficiency. 
C) were useful in enhancing market efficiency when the government enforced the use of exclusive trademarks. 
D) were likely to be more socially efficient when used in conjunction with advertising.

Question 5

In markets where the government imposes an excise tax on unit sales, it also has a tendency to dabble with restrictions on advertising (for example, cigarettes and hard liquor). Do potential (or actual) restrictions on advertising in these markets serve the interest of a government that is interested in maximizing its tax revenue from the sale of these products? Explain your answer.

Accepted Answer

In the case of the examples given, deman

Question 6

Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Accepted Answer

A) change in the technology that the firm utilizes. 
B) shift of its demand curve. 
C) shift of its supply curve. 
D) increase in the firm's average cost of production. 
A) change in the technology that the firm utilizes. 
B) shift of its demand curve. 
C) shift of its supply curve. 
D) increase in the firm's average cost of production.

Question 7

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

Accepted Answer

A) True 
 B)False

Question 8

For a profit-maximizing monopolistically competitive firm, marginal revenue exceeds 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 9

The government of Italy will not allow any Hard Rock Cafe restaurants to open in Italy. Defenders of the efficiency of brand-name markets would argue that this has hindered restaurant market efficiency in Italy.

Accepted Answer

A) True 
 B)False

Question 10

Figure 16-12  
-Refer to Figure 16-12. What is the efficient scale of production?

Accepted Answer

A) This firm cannot produce efficiently. 
B) 12 units 
C) 22 units 
D) 28 units 
A) This firm cannot produce efficiently. 
B) 12 units 
C) 22 units 
D) 28 units

Question 11

​Which of the following goods is most likely to be associated with monopolistic competition?

Accepted Answer

A) ​Gasoline 
B) ​Milk 
C) ​Cookies 
D) ​Wheat 
A) ​Gasoline 
B) ​Milk 
C) ​Cookies 
D) ​Wheat

Question 12

Entry of firms in a monopolistically competitive industry is characterized by two externalities. List them and briefly describe how consumers and existing firms are influenced by them.

Accepted Answer

Business-stealing effect: incumbent firm

Question 13

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Accepted Answer

A) 0.5 
B) 2 
C) 10 
D) 20 
A) 0.5 
B) 2 
C) 10 
D) 20

Question 14

​Which of the following goods is most likely to be associated with monopolistic competition?

Accepted Answer

A) ​Gasoline 
B) ​Milk 
C) ​Cookies 
D) ​Wheat 
A) ​Gasoline 
B) ​Milk 
C) ​Cookies 
D) ​Wheat

Question 15

In many college towns, private independent bookstores typically locate on the periphery of the college campus. However, in some college towns, the university has used political power to restrict private bookstores near campus through community zoning laws. Use your knowledge of markets to predict the price and quality of service differences in the market for college textbooks under the two different market regimes.

Accepted Answer

In monopoly markets, price wil

Question 16

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Accepted Answer

A) P = AR 
B) MR = MC 
C) P > MC 
D) All of the above are correct. 
A) P = AR 
B) MR = MC 
C) P > MC 
D) All of the above are correct.

Question 17

A market structure with only a few sellers, each offering similar or identical products, is known as

Accepted Answer

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

Question 18

A profit-maximizing firm operating in a monopolistically competitive market that is in a long-run equilibrium has

Accepted Answer

A) minimized average total cost. 
B) chosen to produce where demand is unitary elastic. 
C) produced the efficient scale of output. 
D) chosen a quantity of output where average revenue equals average total cost. 
A) minimized average total cost. 
B) chosen to produce where demand is unitary elastic. 
C) produced the efficient scale of output. 
D) chosen a quantity of output where average revenue equals average total cost.

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. Which of the following statements best describes the long run adjustment in this market?

Accepted Answer

A) One or more ice cream shops in Fairfield closes, increasing the demand for Peter's ice cream. Peter's profits increase and he sustains positive profits in the long run. 
B) One or more ice cream shops in Fairfield closes, increasing the demand for Peter's ice cream. Peter's profits increase until he earns zero profit. 
C) One or more new ice cream shops in Fairfield opens and competes with Peter for customers, reducing the demand for Peter's ice cream. Peter's profits decline until he incurs losses and exits the industry. 
D) One or more new ice cream shops in Fairfield opens and competes with Peter for customers, reducing the demand for Peter's ice cream. Peter's profits decline until he earns zero profit. 
A) One or more ice cream shops in Fairfield closes, increasing the demand for Peter's ice cream. Peter's profits increase and he sustains positive profits in the long run. 
B) One or more ice cream shops in Fairfield closes, increasing the demand for Peter's ice cream. Peter's profits increase until he earns zero profit. 
C) One or more new ice cream shops in Fairfield opens and competes with Peter for customers, reducing the demand for Peter's ice cream. Peter's profits decline until he incurs losses and exits the industry. 
D) One or more new ice cream shops in Fairfield opens and competes with Peter for customers, reducing the demand for Peter's ice cream. Peter's profits decline until he earns zero profit.

Question 20

Scenario 16-1
Suppose the following are the sales for all of the firms in two different industries.  
-Refer to Scenario 16-1. Which of the following statements is correct regarding the competitiveness of these two industries?

Accepted Answer

A) Industry A and Industry B are equally competitive. 
B) Industry A is more competitive than Industry B. 
C) Industry A is less competitive than Industry B. 
D) The competitiveness of these two industries cannot be determined from the information given. 
A) Industry A and Industry B are equally competitive. 
B) Industry A is more competitive than Industry B. 
C) Industry A is less competitive than Industry B. 
D) The competitiveness of these two industries cannot be determined from the information given.

One characteristic of an oligopoly market structure is:

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

Edward Chamberlin argued that brand names

Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

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

The government of Italy will not allow any Hard Rock Cafe restaurants to open in Italy. Defenders of the efficiency of brand-name markets would argue that this has hindered restaurant market efficiency in Italy.

Figure 16-12 -Refer to Figure 16-12. What is the efficient scale of production?

Which of the following goods is most likely to be associated with monopolistic competition?

Entry of firms in a monopolistically competitive industry is characterized by two externalities. List them and briefly describe how consumers and existing firms are influenced by them.

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Which of the following goods is most likely to be associated with monopolistic competition?

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

A market structure with only a few sellers, each offering similar or identical products, is known as

A profit-maximizing firm operating in a monopolistically competitive market that is in a long-run equilibrium has

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. Which of the following statements is correct regarding the competitiveness of these two industries?

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

One characteristic of an oligopoly market structure is:

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

Edward Chamberlin argued that brand names

Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

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

The government of Italy will not allow any Hard Rock Cafe restaurants to open in Italy. Defenders of the efficiency of brand-name markets would argue that this has hindered restaurant market efficiency in Italy.

Figure 16-12 -Refer to Figure 16-12. What is the efficient scale of production?

​Which of the following goods is most likely to be associated with monopolistic competition?

Entry of firms in a monopolistically competitive industry is characterized by two externalities. List them and briefly describe how consumers and existing firms are influenced by them.

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

​Which of the following goods is most likely to be associated with monopolistic competition?

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

A market structure with only a few sellers, each offering similar or identical products, is known as

A profit-maximizing firm operating in a monopolistically competitive market that is in a long-run equilibrium has

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. Which of the following statements is correct regarding the competitiveness of these two industries?

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 goods is most likely to be associated with monopolistic competition?

Which of the following goods is most likely to be associated with monopolistic competition?