Question 1

Which of the following is not a characteristic of monopolistic competition?

Accepted Answer

A) a large number of sellers 
B) firms are price takers 
C) free entry into the market 
D) a differentiated product 
A) a large number of sellers 
B) firms are price takers 
C) free entry into the market 
D) a differentiated product

Question 2

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

Accepted Answer

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

Question 3

Figure 16-11  
-Refer to Figure 16-11. If this firm profit-maximizes, what price will it charge?

Accepted Answer

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

Question 4

AllClean knows that it produces and sells very effective laundry detergent. NotQuiteWhite knows that it produces and sells ineffective laundry detergent. According to the signaling theory of advertising,

Accepted Answer

A) both AllClean and NotQuiteWhite have incentives to spend large amounts of money on advertising their products. 
B) AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not. 
C) NotQuiteWhite has an incentive to spend a large amount of money on advertising its detergent, but AllClean does not. 
D) neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of money on advertising their detergents. 
A) both AllClean and NotQuiteWhite have incentives to spend large amounts of money on advertising their products. 
B) AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not. 
C) NotQuiteWhite has an incentive to spend a large amount of money on advertising its detergent, but AllClean does not. 
D) neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of money on advertising their detergents.

Question 5

As new firms enter a monopolistically competitive market, profits of existing firms

Accepted Answer

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

Question 6

Figure 16-4  
-Refer to Figure 16-4. At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total revenue of approximately

Accepted Answer

A) $12,000. 
B) $21,000. 
C) $24,000. 
D) $27,300. 
A) $12,000. 
B) $21,000. 
C) $24,000. 
D) $27,300.

Question 7

A similarity between monopoly and monopolistic competition is that in both market structures

Accepted Answer

A) strategic interactions among sellers are important. 
B) there are a small number of sellers. 
C) sellers are price makers rather than price takers. 
D) there are only a few buyers but many sellers. 
A) strategic interactions among sellers are important. 
B) there are a small number of sellers. 
C) sellers are price makers rather than price takers. 
D) there are only a few buyers but many sellers.

Question 8

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. Efficient scale is reached

Accepted Answer

A) at 100 units. 
B) between 100 and 133.33 units. 
C) at 133.33 units. 
D) beyond 133.33 units. 
A) at 100 units. 
B) between 100 and 133.33 units. 
C) at 133.33 units. 
D) beyond 133.33 units.

Question 9

A firm operating in a monopolistically competitive market can earn economic profits 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 10

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a key feature of monopolistic competition?

Accepted Answer

A) Excess capacity 
B) A markup of price over marginal cost 
C) Positive economic profits for firms in the long run 
D) Differentiated products among firms in the market 
A) Excess capacity 
B) A markup of price over marginal cost 
C) Positive economic profits for firms in the long run 
D) Differentiated products among firms in the market

Question 12

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

Accepted Answer

A) True 
 B)False

Question 13

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.  
-Refer to Table 16-2. Which industry is the most competitive?

Accepted Answer

A) Industry J 
B) Industry K 
C) Industry L 
D) Industry M 
A) Industry J 
B) Industry K 
C) Industry L 
D) Industry M

Question 14

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 the firm has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

Accepted Answer

A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units 
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units

Question 15

Which type of market structure has the fewest number of firms?

Accepted Answer

The answer of Which type of market structure has the...

Question 16

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Accepted Answer

business-s

Question 17

The market structure in which each firm has a monopoly over the product it makes, but many other firms make similar products that compete for the same customers is called

Accepted Answer

monopolist

Question 18

Figure 16-10
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-10. Efficient scale is reached

Accepted Answer

A) at 100 units. 
B) at 133.33 units. 
C) between 133.33 units and 154.92 units. 
D) at 154.92 units. 
A) at 100 units. 
B) at 133.33 units. 
C) between 133.33 units and 154.92 units. 
D) at 154.92 units.

Question 19

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. 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 20

Figure 16-12  
-Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

Accepted Answer

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

Exam 16: Monopolistic Competition

Which of the following is not a characteristic of monopolistic competition?

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

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, what price will it charge?

AllClean knows that it produces and sells very effective laundry detergent. NotQuiteWhite knows that it produces and sells ineffective laundry detergent. According to the signaling theory of advertising,

As new firms enter a monopolistically competitive market, profits of existing firms

Figure 16-4 -Refer to Figure 16-4. At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total revenue of approximately

A similarity between monopoly and monopolistic competition is that in both market structures

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. Efficient scale is reached

A firm operating in a monopolistically competitive market can earn economic profits in

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Which of the following is not a key feature of monopolistic competition?

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry is the most competitive?

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 the firm has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

Which type of market structure has the fewest number of firms?

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

The market structure in which each firm has a monopoly over the product it makes, but many other firms make similar products that compete for the same customers is called

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. Efficient scale is reached

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. Which industry has the lowest concentration ratio?

Figure 16-12 -Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

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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