Question 1

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Accepted Answer

The answer of Due to free entry and exit in...

Question 2

Some firms have an incentive to advertise because they sell a

Accepted Answer

A) homogeneous product and charge a price equal to marginal cost. 
B) homogeneous product and charge a price above marginal cost. 
C) differentiated product and charge a price equal to marginal cost. 
D) differentiated product and charge a price above marginal cost. 
A) homogeneous product and charge a price equal to marginal cost. 
B) homogeneous product and charge a price above marginal cost. 
C) differentiated product and charge a price equal to marginal cost. 
D) differentiated product and charge a price above marginal cost.

Question 3

In the debate between the critics and defenders of advertising, what conclusion have policymakers come to regarding the effect of advertising on competition - advertising makes markets more competitive or less competitive?

Accepted Answer

The answer of In the debate between the critics and...

Question 4

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 5

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

Accepted Answer

A) True 
 B)False

Question 6

For a profit-maximizing monopolistically competitive firm, marginal revenue equals 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 7

An oligopoly

Accepted Answer

A) has a concentration ratio of less than 50 percent. 
B) is a price taker. 
C) is a type of imperfectly competitive market. 
D) has many firms rather than just one firm or a few firms. 
A) has a concentration ratio of less than 50 percent. 
B) is a price taker. 
C) is a type of imperfectly competitive market. 
D) has many firms rather than just one firm or a few firms.

Question 8

In a monopolistically competitive market,

Accepted Answer

A) strategic interactions among the firms are very important. 
B) the threat of entry by new firms is not an important consideration. 
C) the attainment of a Nash equilibrium is an important objective. 
D) firms may enter even though they will earn zero economic profit in the long run. 
A) strategic interactions among the firms are very important. 
B) the threat of entry by new firms is not an important consideration. 
C) the attainment of a Nash equilibrium is an important objective. 
D) firms may enter even though they will earn zero economic profit in the long run.

Question 9

Figure 16-5  
-Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

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 10

Which of the following industries has the highest concentration ratio?

Accepted Answer

A) dresses 
B) apples 
C) books 
D) cigarettes 
A) dresses 
B) apples 
C) books 
D) cigarettes

Question 11

A monopolistically competitive industry is characterized by

Accepted Answer

A) many firms, differentiated products, and barriers to entry. 
B) many firms, differentiated products, and free entry. 
C) a few firms, identical products, and free entry. 
D) a few firms, differentiated products, and barriers to entry. 
A) many firms, differentiated products, and barriers to entry. 
B) many firms, differentiated products, and free entry. 
C) a few firms, identical products, and free entry. 
D) a few firms, differentiated products, and barriers to entry.

Question 12

Which of the following markets is not likely characterized by a monopolistically competitive market?

Accepted Answer

A) mobile telephone service 
B) auto mechanic service 
C) barbershops 
D) jewelry 
A) mobile telephone service 
B) auto mechanic service 
C) barbershops 
D) jewelry

Question 13

Figure 16-7  
-Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive 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 14

Figure 16-5  
-Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

Accepted Answer

A) panel a 
B) panel b 
C) panel c 
D) All of the above are correct. 
A) panel a 
B) panel b 
C) panel c 
D) All of the above are correct.

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 price should this firm charge to maximize profit?

Accepted Answer

A) $6 
B) $12 
C) $18 
D) $24 
A) $6 
B) $12 
C) $18 
D) $24

Question 16

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Accepted Answer

A) The monopolistically competitive firm advertises. 
B) The monopolistically competitive firm produces a quantity of output that falls short of the socially optimal level. 
C) Monopolistic competition features many buyers. 
D) Monopolistic competition features many sellers. 
A) The monopolistically competitive firm advertises. 
B) The monopolistically competitive firm produces a quantity of output that falls short of the socially optimal level. 
C) Monopolistic competition features many buyers. 
D) Monopolistic competition features many sellers.

Question 17

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 18

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. How many ice cream cones should Peter sell in one day to maximize his profits?

Accepted Answer

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

Question 19

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Accepted Answer

A) True 
 B)False

Question 20

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. When this firm profit maximizes and faces a constant marginal cost of $7, what is the amount of its markup over marginal cost?

Accepted Answer

The answer of Table 16-7
A monopolistically competitive firm faces the...

Exam 16: Monopolistic Competition

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Some firms have an incentive to advertise because they sell a

In the debate between the critics and defenders of advertising, what conclusion have policymakers come to regarding the effect of advertising on competition - advertising makes markets more competitive or less competitive?

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

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

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

An oligopoly

In a monopolistically competitive market,

Figure 16-5 -Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Which of the following industries has the highest concentration ratio?

A monopolistically competitive industry is characterized by

Which of the following markets is not likely characterized by a monopolistically competitive market?

Figure 16-7 -Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive market?

Figure 16-5 -Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

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 price should this firm charge to maximize profit?

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

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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