Question 1

Figure 16-4  
-Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

Accepted Answer

A) will increase its profits if it raises its price and reduces its production level. 
B) will increase its profits if it lowers its price and expands its production level. 
C) is maximizing profits. 
D) will increase its profits if it raises its prices and expands its production level. 
A) will increase its profits if it raises its price and reduces its production level. 
B) will increase its profits if it lowers its price and expands its production level. 
C) is maximizing profits. 
D) will increase its profits if it raises its prices and expands its production level.

Question 2

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

Accepted Answer

A) True 
 B)False

Question 3

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following market structures results in a deadweight loss in the long run?
​

Accepted Answer

A) ​Perfect competition and monopolistic competition 
B) Monopolistic competition and monopoly 
C) ​Perfect competition and monopoly 
D) ​All of these market structures lead to a deadweight loss in the long run 
A) ​Perfect competition and monopolistic competition 
B) Monopolistic competition and monopoly 
C) ​Perfect competition and monopoly 
D) ​All of these market structures lead to a deadweight loss in the long run

Question 5

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 6

For a monopolistically competitive firm,

Accepted Answer

A) marginal revenue and price are the same. 
B) average revenue and price are the same. 
C) at the profit-maximizing quantity of output, price equals marginal cost. 
D) at the profit-maximizing quantity of output, price equals the minimum of average total cost. 
A) marginal revenue and price are the same. 
B) average revenue and price are the same. 
C) at the profit-maximizing quantity of output, price equals marginal cost. 
D) at the profit-maximizing quantity of output, price equals the minimum of average total cost.

Question 7

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Accepted Answer

A) highly-differentiated consumer goods. 
B) goods produced by natural monopolies. 
C) agricultural products. 
D) products with a limited shelf life such as milk and lettuce. 
A) highly-differentiated consumer goods. 
B) goods produced by natural monopolies. 
C) agricultural products. 
D) products with a limited shelf life such as milk and lettuce.

Question 8

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 9

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...

Question 10

In a monopolistically competitive market, the demand curves faced by incumbent firms are unaffected by the entry of new firms into the market.

Accepted Answer

A) True 
 B)False

Question 11

For a profit-maximizing monopolistically competitive firm, price exceeds 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 12

Assume the role of a critic of advertising. Describe the characteristics of advertising that reduce the effectiveness of markets and decrease the social welfare of society.

Accepted Answer

Advertising manipulates people's tastes

Question 13

When a firm in a monopolistically competitive market earns zero economic profit, its product price must equal marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

Because a monopolistically competitive firm has some market power, in the long-run the price of its product exceeds its

Accepted Answer

A) average revenue. 
B) average total cost. 
C) marginal cost. 
D) None of the above is correct. 
A) average revenue. 
B) average total cost. 
C) marginal cost. 
D) None of the above is correct.

Question 15

When advertising is used to relay information about price, each firm is able to enhance market power.

Accepted Answer

A) True 
 B)False

Question 16

Edward Chamberlin argued that brand names

Accepted Answer

A) hampered market efficiency. 
B) were instrumental in enhancing market efficiency. 
C) were useful in enhancing market efficiency when the government enforced the use of exclusive trademarks. 
D) were likely to be more socially efficient when used in conjunction with advertising. 
A) hampered market efficiency. 
B) were instrumental in enhancing market efficiency. 
C) were useful in enhancing market efficiency when the government enforced the use of exclusive trademarks. 
D) were likely to be more socially efficient when used in conjunction with advertising.

Question 17

The primary claim of defenders of advertising is that it

Accepted Answer

A) conveys information about firm profitability. 
B) is psychological rather than informational. 
C) enhances the information available to consumers. 
D) reduces the elasticity of demand for a firm's product. 
A) conveys information about firm profitability. 
B) is psychological rather than informational. 
C) enhances the information available to consumers. 
D) reduces the elasticity of demand for a firm's product.

Question 18

When a market is monopolistically competitive, the typical firm in the market can earn

Accepted Answer

A) losses in the short run and profits in the long run. 
B) profits in the short run and the long run. 
C) losses in the short run and zero profit in the long run. 
D) zero profit in the short run and losses in the long run. 
A) losses in the short run and profits in the long run. 
B) profits in the short run and the long run. 
C) losses in the short run and zero profit in the long run. 
D) zero profit in the short run and losses in the long run.

Question 19

Suppose for some firm that average total cost is minimized at Q1 units of output. For a monopolistically competitive firm in long-run equilibrium, Q1

Accepted Answer

A) is also the level of output at which marginal cost equals average total cost. 
B) exceeds the level of output at which there is a point of tangency between the demand curve and the average total cost curve. 
C) exceeds the level of output at which marginal revenue equals marginal cost. 
D) All of the above are correct. 
A) is also the level of output at which marginal cost equals average total cost. 
B) exceeds the level of output at which there is a point of tangency between the demand curve and the average total cost curve. 
C) exceeds the level of output at which marginal revenue equals marginal cost. 
D) All of the above are correct.

Question 20

Which of the following is an example of a monopolistically competitive industry?

Accepted Answer

A) computer operating systems 
B) wheat 
C) movies 
D) cable television 
A) computer operating systems 
B) wheat 
C) movies 
D) cable television

Exam 16: Monopolistic Competition

Figure 16-4 -Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

There is general disagreement among economists about the role of advertising, but there is widespread agreement about the role of brand names on market efficiency.

Which of the following market structures results in a deadweight loss in the long run? ​

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

For a monopolistically competitive firm,

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

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

In a monopolistically competitive market, the demand curves faced by incumbent firms are unaffected by the entry of new firms into the market.

For a profit-maximizing monopolistically competitive firm, price exceeds marginal cost in

Assume the role of a critic of advertising. Describe the characteristics of advertising that reduce the effectiveness of markets and decrease the social welfare of society.

When a firm in a monopolistically competitive market earns zero economic profit, its product price must equal marginal cost.

Because a monopolistically competitive firm has some market power, in the long-run the price of its product exceeds its

When advertising is used to relay information about price, each firm is able to enhance market power.

Edward Chamberlin argued that brand names

The primary claim of defenders of advertising is that it

When a market is monopolistically competitive, the typical firm in the market can earn

Suppose for some firm that average total cost is minimized at Q1 units of output. For a monopolistically competitive firm in long-run equilibrium, Q1

Which of the following is an example of a monopolistically competitive industry?

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

Which of the following market structures results in a deadweight loss in the long run?

Suppose for some firm that average total cost is minimized at Q₁ units of output. For a monopolistically competitive firm in long-run equilibrium, Q₁