Question 1

Which market structure(s) include(s) many firms with differentiated products who can enter and exit the market freely?

Accepted Answer

monopolist

Question 2

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

Accepted Answer

A) P > demand and P = MR 
B) ATC > demand and MR = MC 
C) P > MC and demand = ATC 
D) P  MR 
A) P > demand and P = MR 
B) ATC > demand and MR = MC 
C) P > MC and demand = ATC 
D) P  MR

Question 3

If firms in a particular market sell similar or identical products, then the market is
(i)perfectly competitive.
(ii)monopolistically competitive.
(iii)an oligopoly.

Accepted Answer

A) (i) or (ii) only 
B) (ii) or (iii) only 
C) (i) or (iii) only 
D) (i) only 
A) (i) or (ii) only 
B) (ii) or (iii) only 
C) (i) or (iii) only 
D) (i) only

Question 4

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 5

Since a firm in a monopolistically competitive market faces a

Accepted Answer

A) downward-sloping demand curve, it will always operate with excess capacity. 
B) downward-sloping demand curve, it will always operate at its efficient scale. 
C) perfectly elastic demand curve, it will always operate with excess capacity. 
D) perfectly inelastic demand curve, it will always operate at its efficient scale. 
A) downward-sloping demand curve, it will always operate with excess capacity. 
B) downward-sloping demand curve, it will always operate at its efficient scale. 
C) perfectly elastic demand curve, it will always operate with excess capacity. 
D) perfectly inelastic demand curve, it will always operate at its efficient scale.

Question 6

When a firm operates with excess capacity,

Accepted Answer

A) additional production would lower the average total cost. 
B) additional production would increase the average total cost. 
C) it must be a perfectly competitive firm. 
D) it must be a monopolistically competitive firm. 
A) additional production would lower the average total cost. 
B) additional production would increase the average total cost. 
C) it must be a perfectly competitive firm. 
D) it must be a monopolistically competitive firm.

Question 7

Describe the shape of the monopolistically competitive firm's demand curve.

Accepted Answer

The answer of Describe the shape of the monopolistically competitive...

Question 8

Which market structure(s) is(are) imperfectly competitive?

Accepted Answer

oligopoly

Question 9

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses, Benham found that

Accepted Answer

A) the average price paid for eyeglasses was nearly 20% higher in the states that did not restrict advertising. 
B) the average price paid for eyeglasses was nearly 20% lower in the states that did not restrict advertising. 
C) there was no difference in the average price paid between states that restricted advertising and those that did not. 
D) the average price paid for eyeglasses was almost 5 times higher in the states that did not restrict advertising. 
A) the average price paid for eyeglasses was nearly 20% higher in the states that did not restrict advertising. 
B) the average price paid for eyeglasses was nearly 20% lower in the states that did not restrict advertising. 
C) there was no difference in the average price paid between states that restricted advertising and those that did not. 
D) the average price paid for eyeglasses was almost 5 times higher in the states that did not restrict advertising.

Question 10

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.  
-Refer to Table 16-1. What is the concentration ratio in Industry C?

Accepted Answer

A) 13% 
B) 32% 
C) 52% 
D) 84% 
A) 13% 
B) 32% 
C) 52% 
D) 84%

Question 11

The free entry and exit of firms in a monopolistically competitive market guarantees that

Accepted Answer

A) both economic profits and economic losses can persist in the long run. 
B) both economic profits and economic losses disappear in the long run. 
C) economic profits, but not economic losses, can persist in the long run. 
D) economic losses, but not economic profits, can persist in the long run. 
A) both economic profits and economic losses can persist in the long run. 
B) both economic profits and economic losses disappear in the long run. 
C) economic profits, but not economic losses, can persist in the long run. 
D) economic losses, but not economic profits, can persist in the long run.

Question 12

A law that restricts the ability of hotels/motels to advertise on billboards outside of a resort community would likely lead to

Accepted Answer

A) no change in profits for all hotels/motels. 
B) reduced efficiency of local lodging markets. 
C) a request by consumers to increase the number of billboards. 
D) increased price competition among hotels/motels in the community. 
A) no change in profits for all hotels/motels. 
B) reduced efficiency of local lodging markets. 
C) a request by consumers to increase the number of billboards. 
D) increased price competition among hotels/motels in the community.

Question 13

In which of the following market structures do firms produce the welfare-maximizing level of output?

Accepted Answer

A) perfect competition 
B) monopolistic competition 
C) monopoly 
D) Both a and b are correct. 
A) perfect competition 
B) monopolistic competition 
C) monopoly 
D) Both a and b are correct.

Question 14

Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n)(i)imperfectly competitive market.
(ii)monopoly market.
(iii)oligopoly market.

Accepted Answer

A) (i) and (ii) only 
B) (ii) and (iii) only 
C) (i) and (iii) only 
D) (iii) only 
A) (i) and (ii) only 
B) (ii) and (iii) only 
C) (i) and (iii) only 
D) (iii) only

Question 15

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 16

Figure 16-14  
-Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Accepted Answer

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

Question 17

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 18

Which market structure(s) is(are) imperfectly competitive?

Accepted Answer

oligopoly

Question 19

A monopolistically competitive firm faces a downward-sloping demand curve because there are few firms in the market.

Accepted Answer

A) True 
 B)False

Question 20

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. Given this firm's cost curves, if the firm were perfectly competitive rather than monopolistically competitive, then in a long-run equilibrium it would produce

Accepted Answer

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

Exam 16: Monopolistic Competition

Which market structure(s) include(s) many firms with differentiated products who can enter and exit the market freely?

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

If firms in a particular market sell similar or identical products, then the market is (i)perfectly competitive. (ii)monopolistically competitive. (iii)an oligopoly.

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?

Since a firm in a monopolistically competitive market faces a

When a firm operates with excess capacity,

Describe the shape of the monopolistically competitive firm's demand curve.

Which market structure(s) is(are) imperfectly competitive?

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses, Benham found that

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry C?

The free entry and exit of firms in a monopolistically competitive market guarantees that

A law that restricts the ability of hotels/motels to advertise on billboards outside of a resort community would likely lead to

In which of the following market structures do firms produce the welfare-maximizing level of output?

Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n)(i)imperfectly competitive market. (ii)monopoly market. (iii)oligopoly market.

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

Figure 16-14 -Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

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?

Which market structure(s) is(are) imperfectly competitive?

A monopolistically competitive firm faces a downward-sloping demand curve because there are few firms in the market.

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. Given this firm's cost curves, if the firm were perfectly competitive rather than monopolistically competitive, then in a long-run equilibrium it would produce

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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