Question 1

A monopolistically competitive firm in the long run

Accepted Answer

A)  is inefficient because it makes zero economic profit. 
B)  produces a profit-maximizing amount of output that is less than capacity output. 
C)  is efficient because it makes zero economic profit. 
D)  sets its price equal to its marginal cost. 
A)  is inefficient because it makes zero economic profit. 
B)  produces a profit-maximizing amount of output that is less than capacity output. 
C)  is efficient because it makes zero economic profit. 
D)  sets its price equal to its marginal cost.

Question 2

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).
-In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

Accepted Answer

A)  200 
B)  240 
C)  275 
D)  140 
A)  200 
B)  240 
C)  275 
D)  140

Question 3

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Accepted Answer

A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases 
A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases

Question 4

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 5

-The above figure shows a firm in monopolistic competition. What is the profit maximizing level of output the firm will produce?

Accepted Answer

A)  4 units per day 
B)  8 units per day 
C)  10 units per day 
D)  16 units per day 
A)  4 units per day 
B)  8 units per day 
C)  10 units per day 
D)  16 units per day

Question 6

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Accepted Answer

A)  The firm's price equals its marginal cost. 
B)  The firm's economic profit equals zero. 
C)  The firm's average total cost is minimized. 
D)  The firm's marginal cost equals its average total cost. 
A)  The firm's price equals its marginal cost. 
B)  The firm's economic profit equals zero. 
C)  The firm's average total cost is minimized. 
D)  The firm's marginal cost equals its average total cost.

Question 7

The Firefox, Safari, and Opera browsers are an example of

Accepted Answer

A)  products produced in monopoly industries. 
B)  products produced in perfectly competitive industries. 
C)  product differentiation. 
D)  homogeneous products. 
A)  products produced in monopoly industries. 
B)  products produced in perfectly competitive industries. 
C)  product differentiation. 
D)  homogeneous products.

Question 8

Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company's economists know that it if it does not advertise, it can sell no radios at $80, and for each $10 cut in price, the quantity of radios it can sell increases by 50 a day. This relationship continues to hold until the price falls to $20. The firm's total fixed cost is $3,000 a day. Its marginal cost is constant at $20 per radio. Shower Power's economists have determined that if the firm spends $3,500 a day on advertising, it can double the quantity of radios sold at each price.
a) Draw the new demand curve faced by the firm and its new marginal revenue curve. Also draw Shower Power's marginal cost and average total cost curves.
b) If Shower Power does not advertise, what quantity of radios sold maximizes its profit? What is the profit-maximizing price? What is the firm's economic profit?
c) If Shower Power does advertise, what quantity of radios sold maximizes its profit? What is the profit-maximizing price? What is the maximum economic profit that the firm can make on its shower radios? Draw a diagram to show the effects of advertising.
d) Will Shower Power advertise? Why or why not?

Accepted Answer

@#IMG-DLM& a) The figure above shows Shower Power'

Question 9

In monopolistic competition, firms do not have to produce innovative products because they have downward-sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 10

How do the characteristics of perfect competition and monopolistic competition differ?

Accepted Answer

In monopolistic competition, the product

Question 11

A characteristic of monopolistic competition is that each firm

Accepted Answer

A)  faces perfectly elastic demand. 
B)  faces a downward-sloping demand curve. 
C)  has a perfectly elastic supply. 
D)  has a perfectly inelastic supply. 
A)  faces perfectly elastic demand. 
B)  faces a downward-sloping demand curve. 
C)  has a perfectly elastic supply. 
D)  has a perfectly inelastic supply.

Question 12

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of

Accepted Answer

A)  4 units. 
B)  8 units. 
C)  16 units. 
D)  $10. 
A)  4 units. 
B)  8 units. 
C)  16 units. 
D)  $10.

Question 13

In monopolistic competition, barriers to entry give the firms the power to set their price.

Accepted Answer

A) True 
 B)False

Question 14

Explain why firms in monopolistic competition have excess capacity in the long run.

Accepted Answer

A firm's efficient scale of production i

Question 15

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

Accepted Answer

A)  produce more output at a higher price. 
B)  produce less output at a lower price. 
C)  produce the same quantity at the same price. 
D)  Any of the above are possible. 
A)  produce more output at a higher price. 
B)  produce less output at a lower price. 
C)  produce the same quantity at the same price. 
D)  Any of the above are possible.

Question 16

Excess capacity refers to any unsold output due to insufficient demand.

Accepted Answer

A) True 
 B)False

Question 17

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage ________, which decreases the ________ for each firm's meals.

Accepted Answer

A)  entry; demand 
B)  entry; supply 
C)  exit; demand 
D)  exit; supply 
A)  entry; demand 
B)  entry; supply 
C)  exit; demand 
D)  exit; supply

Question 18

A positive markup is earned by a firm if its

Accepted Answer

A)  price exceeds its marginal cost. 
B)  marginal revenue equals marginal cost. 
C)  price equals marginal cost. 
D)  price equals average total cost. 
A)  price exceeds its marginal cost. 
B)  marginal revenue equals marginal cost. 
C)  price equals marginal cost. 
D)  price equals average total cost.

Question 19

-The above figure shows the demand and cost curves for a firm. The figure shows a

Accepted Answer

A)  monopolistically competitive firm in the long run. 
B)  perfectly competitive firm earning zero profit. 
C)  monopolistically competitive firm in the short run. 
D)  perfectly competitive firm in the short run. 
A)  monopolistically competitive firm in the long run. 
B)  perfectly competitive firm earning zero profit. 
C)  monopolistically competitive firm in the short run. 
D)  perfectly competitive firm in the short run.

Question 20

A textbook publisher is in monopolistic competition. The firm can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's average variable cost and marginal cost is a constant $20 per book. What is the publisher's profit-maximizing price?

Accepted Answer

A)  $40 
B)  $50 
C)  $60 
D)  $70 
A)  $40 
B)  $50 
C)  $60 
D)  $70

A monopolistically competitive firm in the long run

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts , the marginal curve shifts , and the profit-maximizing quantity .

How do product development and marketing affect a firm in monopolistic competition?

-The above figure shows a firm in monopolistic competition. What is the profit maximizing level of output the firm will produce?

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

The Firefox, Safari, and Opera browsers are an example of

In monopolistic competition, firms do not have to produce innovative products because they have downward-sloping demand curves.

How do the characteristics of perfect competition and monopolistic competition differ?

A characteristic of monopolistic competition is that each firm

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of

In monopolistic competition, barriers to entry give the firms the power to set their price.

Explain why firms in monopolistic competition have excess capacity in the long run.

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

Excess capacity refers to any unsold output due to insufficient demand.

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage , which decreases the for each firm's meals.

A positive markup is earned by a firm if its

-The above figure shows the demand and cost curves for a firm. The figure shows a

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 14: Monopolistic Competition

A monopolistically competitive firm in the long run

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

How do product development and marketing affect a firm in monopolistic competition?

-The above figure shows a firm in monopolistic competition. What is the profit maximizing level of output the firm will produce?

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

The Firefox, Safari, and Opera browsers are an example of

In monopolistic competition, firms do not have to produce innovative products because they have downward-sloping demand curves.

How do the characteristics of perfect competition and monopolistic competition differ?

A characteristic of monopolistic competition is that each firm

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm has excess capacity of

In monopolistic competition, barriers to entry give the firms the power to set their price.

Explain why firms in monopolistic competition have excess capacity in the long run.

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

Excess capacity refers to any unsold output due to insufficient demand.

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage ________, which decreases the ________ for each firm's meals.

A positive markup is earned by a firm if its

-The above figure shows the demand and cost curves for a firm. The figure shows a

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts , the marginal curve shifts , and the profit-maximizing quantity .

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage , which decreases the for each firm's meals.