Question 1

Monopolistic competition is considered inefficient because

Accepted Answer

A) price exceeds marginal cost. 
B) output is excessive. 
C) long-run profits are positive. 
D) barriers to entry limit the number of firms in the market. 
A) price exceeds marginal cost. 
B) output is excessive. 
C) long-run profits are positive. 
D) barriers to entry limit the number of firms in the market.

Question 2

When McDonald's opens a store in Dhaka, Bangladesh, it has a strong incentive to enforce product quality consistent with stores in the United States.

Accepted Answer

A) True 
 B)False

Question 3

​Which of the following is true about a monopolistically competitive firm?

Accepted Answer

A) ​It can earn an economic profit in the short run, but not the long run. 
B) ​It can earn an economic profit in the short run and the long run 
C) ​It can earn an economic profit in the long run, but not the short run 
D) ​It cannot earn an economic profit in either the short or long run 
A) ​It can earn an economic profit in the short run, but not the long run. 
B) ​It can earn an economic profit in the short run and the long run 
C) ​It can earn an economic profit in the long run, but not the short run 
D) ​It cannot earn an economic profit in either the short or long run

Question 4

The debate over whether advertising serves a valuable purpose in society is definitively answered by economists who study the tastes and preferences of individuals.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following correctly lists the products in order from most advertised to least advertised?

Accepted Answer

A) soft drinks, breakfast cereals, dog food 
B) corn, dog food, communication satellites 
C) dog food, communication satellites, corn 
D) wheat, corn, crude oil 
A) soft drinks, breakfast cereals, dog food 
B) corn, dog food, communication satellites 
C) dog food, communication satellites, corn 
D) wheat, corn, crude oil

Question 6

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Accepted Answer

A) advertising. 
B) the product-variety externality. 
C) intermediate materials. 
D) taxes and regulation. 
A) advertising. 
B) the product-variety externality. 
C) intermediate materials. 
D) taxes and regulation.

Question 7

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already. Statistics show that vacancy rates average 15 percent during any given semester."

Accepted Answer

Business-stealing effect: if new entrant

Question 8

"In a long-run equilibrium, price is equal to average total cost." This statement applies to

Accepted Answer

A) competitive markets, but not to monopolistically competitive markets or monopolies. 
B) competitive and monopolistically competitive markets, but not to monopolies. 
C) competitive markets, monopolistically competitive markets, and monopolies. 
D) None of the above is correct. 
A) competitive markets, but not to monopolistically competitive markets or monopolies. 
B) competitive and monopolistically competitive markets, but not to monopolies. 
C) competitive markets, monopolistically competitive markets, and monopolies. 
D) None of the above is correct.

Question 9

A new Mexican restaurant opens in the city of Manchester. The residents are happy about this new restaurant because they are experiencing what externality?

Accepted Answer

product-va

Question 10

Figure 16-8
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms.  
-Refer to Figure 16-8. Which of the diagrams illustrates the impact of some existing firms leaving the market?

Accepted Answer

A) panel a 
B) panel b 
C) panel c 
D) panel d 
A) panel a 
B) panel b 
C) panel c 
D) panel d

Question 11

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 has the lowest concentration ratio?

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 12

Figure 16-4  
-Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

Accepted Answer

A) will increase its profits if it raises its price and reduces its production level. 
B) will increase its profits if it lowers its price and expands its production level. 
C) is maximizing profits. 
D) will increase its profits if it raises its prices and expands its production level. 
A) will increase its profits if it raises its price and reduces its production level. 
B) will increase its profits if it lowers its price and expands its production level. 
C) is maximizing profits. 
D) will increase its profits if it raises its prices and expands its production level.

Question 13

When a firm operates at efficient scale, it is producing at the minimum point on its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is most likely sold in a monopolistically competitive market?

Accepted Answer

A) wheat 
B) cable TV programming 
C) a share of McDonald's stock 
D) sunglasses 
A) wheat 
B) cable TV programming 
C) a share of McDonald's stock 
D) sunglasses

Question 15

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. What is this firm's total cost at the profit-maximizing quantity?

Accepted Answer

A) $12 
B) $18 
C) $32 
D) $36 
A) $12 
B) $18 
C) $32 
D) $36

Question 16

Figure 16-4  
-Refer to Figure 16-4. The maximum total short-run economic profit for the monopolistically competitive firm in this figure is

Accepted Answer

A) -$3,000. 
B) $3,000. 
C) $9,000. 
D) $24,000. 
A) -$3,000. 
B) $3,000. 
C) $9,000. 
D) $24,000.

Question 17

Figure 16-11  
-Refer to Figure 16-11. The profit for this firm is

Accepted Answer

A) $375. 
B) $500. 
C) $1000. 
D) $1250. 
A) $375. 
B) $500. 
C) $1000. 
D) $1250.

Question 18

A firm in a monopolistically competitive market can earn both short-run and long-run profits.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

For a monopolistically competitive firm, at the profit-maximizing quantity of output,

Accepted Answer

A) price exceeds marginal cost. 
B) marginal revenue exceeds marginal cost. 
C) marginal cost exceeds average revenue. 
D) price equals marginal revenue. 
A) price exceeds marginal cost. 
B) marginal revenue exceeds marginal cost. 
C) marginal cost exceeds average revenue. 
D) price equals marginal revenue.

Exam 16: Monopolistic Competition

Monopolistic competition is considered inefficient because

When McDonald's opens a store in Dhaka, Bangladesh, it has a strong incentive to enforce product quality consistent with stores in the United States.

​Which of the following is true about a monopolistically competitive firm?

The debate over whether advertising serves a valuable purpose in society is definitively answered by economists who study the tastes and preferences of individuals.

Which of the following correctly lists the products in order from most advertised to least advertised?

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already. Statistics show that vacancy rates average 15 percent during any given semester."

"In a long-run equilibrium, price is equal to average total cost." This statement applies to

A new Mexican restaurant opens in the city of Manchester. The residents are happy about this new restaurant because they are experiencing what externality?

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 has the lowest concentration ratio?

Figure 16-4 -Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

When a firm operates at efficient scale, it is producing at the minimum point on its average total cost curve.

Which of the following is most likely sold in a monopolistically competitive market?

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. What is this firm's total cost at the profit-maximizing quantity?

Figure 16-4 -Refer to Figure 16-4. The maximum total short-run economic profit for the monopolistically competitive firm in this figure is

Figure 16-11 -Refer to Figure 16-11. The profit for this firm is

A firm in a monopolistically competitive market can earn both short-run and long-run profits.

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

For a monopolistically competitive firm, at the profit-maximizing quantity of output,

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 is true about a monopolistically competitive firm?