Question 1

Figure 16-13  
-Refer to Figure 16-13. What is the first step in this industry's adjustment to long run equilibrium?

Accepted Answer

The answer of Figure 16-13  
-Refer to Figure 16-13....

Question 2

Scenario 16-9
Dean goes to the grocery store to buy chips and soda for a party. He purchases brand name products even though generic versions are available at lower prices. His friend John says he was irrational to spend more for a nearly identical product. His friend Martina agreed with Dean's decision to spend more for the brand name products.
-Refer to Scenario 16-9. If Dean bought the brand name because of advertising he saw for the product, a defender of advertising would say

Accepted Answer

the advertising conv

Question 3

Scenario 16-9
Dean goes to the grocery store to buy chips and soda for a party. He purchases brand name products even though generic versions are available at lower prices. His friend John says he was irrational to spend more for a nearly identical product. His friend Martina agreed with Dean's decision to spend more for the brand name products.
-Refer to Scenario 16-9. If advertising were banned in these markets, what would likely happen to the prices of chips and soda?

Accepted Answer

They would

Question 4

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, what price would a profit-maximizing monopolist charge for the product?

Accepted Answer

A) P = 0 
B) P = 5 
C) P = 10 
D) P = 20 
A) P = 0 
B) P = 5 
C) P = 10 
D) P = 20

Question 5

Table 16-6
Beatrice's Birthday Cakes is one bakery among many in the market for birthday cakes. The following table presents cost and revenue data for birthday cakes at Beatrice's.  
-Refer to Table 16-6. Suppose the government forced Beatrice's to produce at the efficient scale of output. Who would be better off as a result of this policy? Who would be worse off as a result of this policy?

Accepted Answer

A) Beatrice's would be better off; consumers would be worse off. 
B) Consumers would be better off; Beatrice's would be worse off. 
C) No one would be better off; consumers would be worse off. 
D) No one would be better off; no one would be worse off. 
A) Beatrice's would be better off; consumers would be worse off. 
B) Consumers would be better off; Beatrice's would be worse off. 
C) No one would be better off; consumers would be worse off. 
D) No one would be better off; no one would be worse off.

Question 6

According to the signaling theory of advertising, consumers

Accepted Answer

A) pay little or no attention to which firms advertise and which firms do not advertise. 
B) are often more impressed by a firm's willingness to spend money on advertising than they are by the content of the advertisement. 
C) are often more impressed by low-cost advertisements than they are by high-cost advertisements. 
D) gain little or no information about product quality from advertisements. 
A) pay little or no attention to which firms advertise and which firms do not advertise. 
B) are often more impressed by a firm's willingness to spend money on advertising than they are by the content of the advertisement. 
C) are often more impressed by low-cost advertisements than they are by high-cost advertisements. 
D) gain little or no information about product quality from advertisements.

Question 7

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....

Question 8

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 9

Television advertisements aired during major sporting events are very expensive. A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising

Accepted Answer

A) enhances the effectiveness of the advertisement. 
B) reduces people's willingness to purchase advertised products. 
C) is leaked to discredit the firms that spend so much on advertising. 
D) reduces the effective staying power of a product. 
A) enhances the effectiveness of the advertisement. 
B) reduces people's willingness to purchase advertised products. 
C) is leaked to discredit the firms that spend so much on advertising. 
D) reduces the effective staying power of a product.

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 B?

Accepted Answer

A) 18% 
B) 34% 
C) 61% 
D) 95% 
A) 18% 
B) 34% 
C) 61% 
D) 95%

Question 11

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 12

Monopolistically competitive markets differ from perfectly competitive markets due to
(i)the number of sellers.
(ii)the barriers to entry.
(iii)the product differentiation among the sellers.

Accepted Answer

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

Question 13

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures features entry in the long run?

Accepted Answer

perfect co

Question 14

Figure 16-12  
-Refer to Figure 16-12. If this firm profit-maximizes, what price will it charge?

Accepted Answer

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

Question 15

Figure 16-14  
-Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Accepted Answer

A) ABC 
B) IJK 
C) BHJ 
D) BCIJ 
A) ABC 
B) IJK 
C) BHJ 
D) BCIJ

Question 16

Figure 16-12  
-Refer to Figure 16-12. What, if any, long run adjustment will take place in this industry?

Accepted Answer

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

Question 17

A firm has the following cost structure:   If this firm is in a typical monopolistically competitive market, in the long run it will likely produce

Accepted Answer

A) 8 or fewer units of output. 
B) 10 units of output. 
C) more than 10 units of output. 
D) None of the above are necessarily correct because there is not enough information to tell. 
A) 8 or fewer units of output. 
B) 10 units of output. 
C) more than 10 units of output. 
D) None of the above are necessarily correct because there is not enough information to tell.

Question 18

Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms,

Accepted Answer

A) marginal revenue will equal average total cost. 
B) price will exceed marginal cost. 
C) marginal cost will exceed average revenue. 
D) average variable cost will be declining. 
A) marginal revenue will equal average total cost. 
B) price will exceed marginal cost. 
C) marginal cost will exceed average revenue. 
D) average variable cost will be declining.

Question 19

When a firm exits a monopolistically competitive market, the individual demand curves faced by all remaining firms in that market will

Accepted Answer

A) shift in a direction that is unpredictable without further information. 
B) shift to the right. 
C) shift to the left. 
D) remain unchanged. It is the supply curve that will shift. 
A) shift in a direction that is unpredictable without further information. 
B) shift to the right. 
C) shift to the left. 
D) remain unchanged. It is the supply curve that will shift.

Question 20

Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus. This externality is called the

Accepted Answer

product-va

Exam 16: Monopolistic Competition

Figure 16-13 -Refer to Figure 16-13. What is the first step in this industry's adjustment to long run equilibrium?

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, what price would a profit-maximizing monopolist charge for the product?

According to the signaling theory of advertising, consumers

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

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

Television advertisements aired during major sporting events are very expensive. A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising

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 B?

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

Monopolistically competitive markets differ from perfectly competitive markets due to (i)the number of sellers. (ii)the barriers to entry. (iii)the product differentiation among the sellers.

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures features entry in the long run?

Figure 16-12 -Refer to Figure 16-12. If this firm profit-maximizes, what price will it charge?

Figure 16-14 -Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Figure 16-12 -Refer to Figure 16-12. What, if any, long run adjustment will take place in this industry?

A firm has the following cost structure: If this firm is in a typical monopolistically competitive market, in the long run it will likely produce

Product differentiation in monopolistically competitive markets ensures that, for profit-maximizing firms,

When a firm exits a monopolistically competitive market, the individual demand curves faced by all remaining firms in that market will

Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus. This externality is called the

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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