Question 1

Figure 16-12  
-Refer to Figure 16-12. Compare the price and marginal cost in this market with price and marginal cost if this were a perfectly competitive market.

Accepted Answer

Monopolistic competi

Question 2

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Accepted Answer

A) True 
 B)False

Question 3

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. What price should Peter charge to maximize his profits?

Accepted Answer

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

Question 4

Figure 16-13  
-Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

Accepted Answer

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

Question 5

A monopolistically competitive firm

Accepted Answer

A) has the usual deadweight loss of monopoly pricing. 
B) experiences a zero profit in a long-run equilibrium. 
C) is said to have excess capacity. 
D) All of the above are correct. 
A) has the usual deadweight loss of monopoly pricing. 
B) experiences a zero profit in a long-run equilibrium. 
C) is said to have excess capacity. 
D) All of the above are correct.

Question 6

Regulation of a firm in a monopolistically competitive market

Accepted Answer

A) usually implies a very small administrative burden. 
B) will lower the firm's costs. 
C) is commonly used to enhance market efficiency. 
D) is unlikely to improve market efficiency. 
A) usually implies a very small administrative burden. 
B) will lower the firm's costs. 
C) is commonly used to enhance market efficiency. 
D) is unlikely to improve market efficiency.

Question 7

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. What is the concentration ratio for Industry M?

Accepted Answer

A) about 96% 
B) about 52% 
C) about 40% 
D) about 22% 
A) about 96% 
B) about 52% 
C) about 40% 
D) about 22%

Question 8

The product-variety externality arises in monopolistically competitive markets because

Accepted Answer

A) firms produce with excess capacity. 
B) firms try to differentiate their products. 
C) firms would like to produce homogeneous products, but the large number of firms prohibits it. 
D) entry and exit is restricted. 
A) firms produce with excess capacity. 
B) firms try to differentiate their products. 
C) firms would like to produce homogeneous products, but the large number of firms prohibits it. 
D) entry and exit is restricted.

Question 9

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. Based on the concentration ratio, which industry is the most competitive?

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 10

A monopolistically competitive firm faces the following demand schedule for its product:   The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with

Accepted Answer

A) 9 units of output. 
B) 15 units of output. 
C) 21 units of output. 
D) 30 units of output. 
A) 9 units of output. 
B) 15 units of output. 
C) 21 units of output. 
D) 30 units of output.

Question 11

Figure 16-12  
-Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Accepted Answer

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

Question 12

Both monopolistic competition and oligopoly are market structures

Accepted Answer

A) that fail to achieve the total surplus achieved by perfect competition. 
B) that feature only a few firms in each market. 
C) to which the concept of Nash equilibrium is frequently applied by economists. 
D) in which firms earn zero economic profit in the long run. 
A) that fail to achieve the total surplus achieved by perfect competition. 
B) that feature only a few firms in each market. 
C) to which the concept of Nash equilibrium is frequently applied by economists. 
D) in which firms earn zero economic profit in the long run.

Question 13

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

Accepted Answer

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

Question 14

Figure 16-12  
-Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Accepted Answer

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

Question 15

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Accepted Answer

Monopolistically competitive f

Question 16

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. At the profit-maximizing level of output, what is this firm's total cost of production?

Accepted Answer

A) $1,200 
B) $1,400 
C) $1,600 
D) $1,875 
A) $1,200 
B) $1,400 
C) $1,600 
D) $1,875

Question 17

If "too much choice" is a problem for consumers, it would occur in which market structure(s)?

Accepted Answer

A) perfect competition 
B) monopoly 
C) monopolistic competition 
D) perfect competition and monopolistic competition 
A) perfect competition 
B) monopoly 
C) monopolistic competition 
D) perfect competition and monopolistic competition

Question 18

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 19

Figure 16-10
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?

Accepted Answer

A) at 100 units of output 
B) somewhere between 100 and 133.33 units of output 
C) at 133.33 units of output 
D) at 154.92 units of output 
A) at 100 units of output 
B) somewhere between 100 and 133.33 units of output 
C) at 133.33 units of output 
D) at 154.92 units of output

Question 20

The fact that monopolistically competitive firms charge a price that exceeds marginal cost is responsible for the

Accepted Answer

A) business-stealing externality that is observed in monopolistically competitive markets. 
B) product-variety externality that is observed in monopolistically competitive markets. 
C) inefficiencies of the long-term losses earned by monopolistically competitive firms. 
D) persistence of positive profits into the long run for monopolistically competitive firms. 
A) business-stealing externality that is observed in monopolistically competitive markets. 
B) product-variety externality that is observed in monopolistically competitive markets. 
C) inefficiencies of the long-term losses earned by monopolistically competitive firms. 
D) persistence of positive profits into the long run for monopolistically competitive firms.

Exam 16: Monopolistic Competition

Figure 16-12 -Refer to Figure 16-12. Compare the price and marginal cost in this market with price and marginal cost if this were a perfectly competitive market.

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

A monopolistically competitive firm

Regulation of a firm in a monopolistically competitive market

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. What is the concentration ratio for Industry M?

The product-variety externality arises in monopolistically competitive markets because

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. Based on the concentration ratio, which industry is the most competitive?

A monopolistically competitive firm faces the following demand schedule for its product: The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with

Figure 16-12 -Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Both monopolistic competition and oligopoly are market structures

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

Figure 16-12 -Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. At the profit-maximizing level of output, what is this firm's total cost of production?

If "too much choice" is a problem for consumers, it would occur in which market structure(s)?

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

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?

The fact that monopolistically competitive firms charge a price that exceeds marginal cost is responsible for 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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