Question 1

Which of the following statements is correct?

Accepted Answer

A) Cigarettes are likely to be produced in a monopolistically competitive industry. 
B) Novels are likely to be produced in a monopoly industry. 
C) Movies are likely to be produced in a monopolistically competitive industry. 
D) Milk is likely to be produced in an oligopoly industry. 
A) Cigarettes are likely to be produced in a monopolistically competitive industry. 
B) Novels are likely to be produced in a monopoly industry. 
C) Movies are likely to be produced in a monopolistically competitive industry. 
D) Milk is likely to be produced in an oligopoly industry.

Question 2

A monopolistically competitive firm

Accepted Answer

A) charges a price that is equal to marginal cost. 
B) experiences a zero profit in the long run. 
C) produces at the efficient scale in the long run. 
D) All of the above are correct. 
A) charges a price that is equal to marginal cost. 
B) experiences a zero profit in the long run. 
C) produces at the efficient scale in the long run. 
D) All of the above are correct.

Question 3

If there are many firms participating in a market, the market is either

Accepted Answer

A) an oligopoly or monopolistically competitive. 
B) perfectly competitive or monopolistically competitive. 
C) an oligopoly or perfectly competitive. 
D) an oligopoly or a cartel. 
A) an oligopoly or monopolistically competitive. 
B) perfectly competitive or monopolistically competitive. 
C) an oligopoly or perfectly competitive. 
D) an oligopoly or a cartel.

Question 4

Which of the following goods are not likely to be sold in monopolistically competitive markets?

Accepted Answer

A) jeans 
B) books 
C) tap water 
D) clocks 
A) jeans 
B) books 
C) tap water 
D) clocks

Question 5

In a monopolistically competitive industry, firms set price

Accepted Answer

A) equal to marginal cost since each firm is a price taker. 
B) below marginal cost since each firm is a price taker. 
C) above marginal cost since each firm is a price setter. 
D) always a fraction of marginal cost since each firm is a price setter. 
A) equal to marginal cost since each firm is a price taker. 
B) below marginal cost since each firm is a price taker. 
C) above marginal cost since each firm is a price setter. 
D) always a fraction of marginal cost since each firm is a price setter.

Question 6

Figure 16-5  
-Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is

Accepted Answer

A) earning zero economic profit. 
B) likely to exit the market in the long run. 
C) producing its efficient scale of output. 
D) not maximizing its profit. 
A) earning zero economic profit. 
B) likely to exit the market in the long run. 
C) producing its efficient scale of output. 
D) not maximizing its profit.

Question 7

The lower the concentration ratio, the

Accepted Answer

A) more control an individual firm has to set prices. 
B) more competitive the industry. 
C) less competitive the industry. 
D) Both a and c are correct. 
A) more control an individual firm has to set prices. 
B) more competitive the industry. 
C) less competitive the industry. 
D) Both a and c are correct.

Question 8

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

Accepted Answer

A) P > ATC B) P = ATC C) P < ATC D) Any of the above could be correct. A) P > ATC B) P = ATC C) P < ATC D) Any of the above could be correct.

Question 9

In a monopolistically competitive market,

Accepted Answer

A) there are only a few sellers. 
B) each firm takes the price of its product as given. 
C) firms can enter or exit the market without restrictions. 
D) each firm produces a product that is essentially identical to the products of other firms in the market. 
A) there are only a few sellers. 
B) each firm takes the price of its product as given. 
C) firms can enter or exit the market without restrictions. 
D) each firm produces a product that is essentially identical to the products of other firms in the market.

Question 10

If firms in a monopolistically competitive market are earning positive profits, then

Accepted Answer

A) firms will likely be subject to regulation. 
B) barriers to entry will be strengthened. 
C) some firms will exit the market. 
D) new firms will enter the market. 
A) firms will likely be subject to regulation. 
B) barriers to entry will be strengthened. 
C) some firms will exit the market. 
D) new firms will enter the market.

Question 11

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios would best describe the change existing firms would face as the market adjusts to the long-run equilibrium?

Accepted Answer

A) an increase in demand for each firm 
B) a decrease in demand for each firm 
C) a downward shift in the marginal cost curve for each firm 
D) an upward shift in the marginal cost curve for each firm 
A) an increase in demand for each firm 
B) a decrease in demand for each firm 
C) a downward shift in the marginal cost curve for each firm 
D) an upward shift in the marginal cost curve for each firm

Question 12

Economists are unanimous in their belief that advertising is socially inefficient.

Accepted Answer

A) True 
 B)False

Question 13

A monopolistically competitive firm's choice of output level is virtually identical to the choice made by

Accepted Answer

A) a perfectly competitive firm. 
B) a duopolist. 
C) a monopolist. 
D) an oligopolist. 
A) a perfectly competitive firm. 
B) a duopolist. 
C) a monopolist. 
D) an oligopolist.

Question 14

​Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect:

Accepted Answer

A) ​The price to fall and output to rise 
B) ​The price to fall and output to fall 
C) ​The price to rise and output to rise 
D) ​The price to rise and output to fall 
A) ​The price to fall and output to rise 
B) ​The price to fall and output to fall 
C) ​The price to rise and output to rise 
D) ​The price to rise and output to fall

Question 15

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

Accepted Answer

A) True 
 B)False

Question 16

A monopolistically competitive market is characterized by

Accepted Answer

A) free entry, but not differentiated products. 
B) differentiated products, but not long run profits. 
C) long run profits, but not many firms. 
D) many firms, but not free entry. 
A) free entry, but not differentiated products. 
B) differentiated products, but not long run profits. 
C) long run profits, but not many firms. 
D) many firms, but not free entry.

Question 17

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.  
-Refer to Table 16-4. At the profit-maximizing level of output, what is this firm's total cost?

Accepted Answer

A) $10 
B) $40 
C) $88 
D) $100 
A) $10 
B) $40 
C) $88 
D) $100

Question 18

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 19

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 20

In both perfect competition and monopolistic competition, each firm

Accepted Answer

A) has some monopoly power. 
B) sells a product that is at least slightly different from those of other firms. 
C) faces a downward-sloping demand curve. 
D) has many competitors. 
A) has some monopoly power. 
B) sells a product that is at least slightly different from those of other firms. 
C) faces a downward-sloping demand curve. 
D) has many competitors.

Exam 16: Monopolistic Competition

Which of the following statements is correct?

A monopolistically competitive firm

If there are many firms participating in a market, the market is either

Which of the following goods are not likely to be sold in monopolistically competitive markets?

In a monopolistically competitive industry, firms set price

Figure 16-5 -Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is

The lower the concentration ratio, the

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

In a monopolistically competitive market,

If firms in a monopolistically competitive market are earning positive profits, then

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios would best describe the change existing firms would face as the market adjusts to the long-run equilibrium?

Economists are unanimous in their belief that advertising is socially inefficient.

A monopolistically competitive firm's choice of output level is virtually identical to the choice made by

​Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect:

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

A monopolistically competitive market is characterized by

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4. At the profit-maximizing level of output, what is this firm's total cost?

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 16-7 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?

In both perfect competition and monopolistic competition, each firm

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

Filters

Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect: