Question 1

In monopolistic competition, firms can make an economic profit in

Accepted Answer

A)  the short run and in the long run. 
B)  the short run but not in the long run. 
C)  the long run but not in the short run. 
D)  neither the long run nor the short run. 
A)  the short run and in the long run. 
B)  the short run but not in the long run. 
C)  the long run but not in the short run. 
D)  neither the long run nor the short run.

Question 2

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Accepted Answer

The efficient scale of output is the lev

Question 3

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. Suppose La Super Rica maximizes its profit. If La Super Rica's lunch price is greater than its average total cost, which of the following statements is NOT true?

Accepted Answer

A)  La Super Rica is producing at its efficient scale. 
B)  La Super Rica is making an economic profit. 
C)  La Super Rica is producing a quantity where marginal revenue equals marginal cost. 
D)  La Super Rica has excess capacity. 
A)  La Super Rica is producing at its efficient scale. 
B)  La Super Rica is making an economic profit. 
C)  La Super Rica is producing a quantity where marginal revenue equals marginal cost. 
D)  La Super Rica has excess capacity.

Question 4

Which of the following is NOT a true statement about perfectly competitive and monopolistically competitive firms?

Accepted Answer

A)  Both monopolistically competitive and perfectly competitive firms have perfectly elastic demands. 
B)  In the long run, only monopolistically competitive firms have excess capacity. 
C)  Perfectly competitive firms produce at their efficient scale. 
D)  There are a large number of firms in both monopolistically competitive and perfectly competitive markets. 
A)  Both monopolistically competitive and perfectly competitive firms have perfectly elastic demands. 
B)  In the long run, only monopolistically competitive firms have excess capacity. 
C)  Perfectly competitive firms produce at their efficient scale. 
D)  There are a large number of firms in both monopolistically competitive and perfectly competitive markets.

Question 5

Small pizza parlors exist in just about every town. Anyone can open a pizza parlor, and the pizzas from one parlor typically have different tastes and sizes than pizzas from another parlor. Thus, the pizza industry is an example of

Accepted Answer

A)  perfect competition. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistic competition. 
A)  perfect competition. 
B)  monopoly. 
C)  oligopoly. 
D)  monopolistic competition.

Question 6

Monopolistic competition is a market structure in which

Accepted Answer

A)  a small number of firms compete. 
B)  firms produce identical products. 
C)  firms compete on product quality, price, and marketing. 
D)  natural or legal barriers prevent the entry of new firms. 
A)  a small number of firms compete. 
B)  firms produce identical products. 
C)  firms compete on product quality, price, and marketing. 
D)  natural or legal barriers prevent the entry of new firms.

Question 7

In the short run, a firm in monopolistic competition produces where

Accepted Answer

A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC. 
A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC.

Question 8

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift ________ and the MR curve will shift ________.

Accepted Answer

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

Question 9

Which of the following four firms would most likely be part of a monopolistically competitive market?

Accepted Answer

A)  Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, and Wrangler are all producers of jeans. 
B)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
C)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
D)  Amara Massage is the only firm which specializes in pre- and post-natal massage. 
A)  Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, and Wrangler are all producers of jeans. 
B)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
C)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
D)  Amara Massage is the only firm which specializes in pre- and post-natal massage.

Question 10

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

Accepted Answer

A)  perfect competition; short run 
B)  monopolistic competition; long run 
C)  perfect competition; long run 
D)  monopolistic competition; short run 
A)  perfect competition; short run 
B)  monopolistic competition; long run 
C)  perfect competition; long run 
D)  monopolistic competition; short run

Question 11

Why would a firm in a monopolistically competitive industry ever advertise?

Accepted Answer

Similar to virtually every other busines

Question 12

-The above figure shows a monopolistically competitive firm. The figure

Accepted Answer

A)  is only a short-run illustration because the firm is making an economic profit. 
B)  could be either a short-run or long-run illustration because monopolistically competitive firms can make an economic profit in the long-run. 
C)  is only a long-run illustration because the firm is making zero economic profit. 
D)  is neither a short- nor a long-run illustration. 
A)  is only a short-run illustration because the firm is making an economic profit. 
B)  could be either a short-run or long-run illustration because monopolistically competitive firms can make an economic profit in the long-run. 
C)  is only a long-run illustration because the firm is making zero economic profit. 
D)  is neither a short- nor a long-run illustration.

Question 13

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 firm's markup?

Accepted Answer

A)  zero 
B)  $20 
C)  $40 
D)  $60 
A)  zero 
B)  $20 
C)  $40 
D)  $60

Question 14

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for about $200 a pair. What would happen if J Brand priced their jeans at $220 per pair?

Accepted Answer

A)  They would sell fewer jeans because demand is elastic. 
B)  They would not sell any jeans. 
C)  They would sell more jeans. 
D)  They would sell fewer jeans because demand is perfectly elastic. 
A)  They would sell fewer jeans because demand is elastic. 
B)  They would not sell any jeans. 
C)  They would sell more jeans. 
D)  They would sell fewer jeans because demand is perfectly elastic.

Question 15

-In the figure above, the firm's economic

Accepted Answer

A)  loss will be greater than $30 per day. 
B)  loss will be $30 or less per day. 
C)  profit will be between $0 and $30 per day. 
D)  profit will be greater than $30.01 per day. 
A)  loss will be greater than $30 per day. 
B)  loss will be $30 or less per day. 
C)  profit will be between $0 and $30 per day. 
D)  profit will be greater than $30.01 per day.

Question 16

-The above figure is for a firm in monopolistic competition. The diagram represents the short run rather than the long run because the

Accepted Answer

A)  MR curve cuts the ATC curve from below. 
B)  MR curve and the D curve do not coincide. 
C)  firm is incurring an economic loss. 
D)  firm is making an economic profit. 
A)  MR curve cuts the ATC curve from below. 
B)  MR curve and the D curve do not coincide. 
C)  firm is incurring an economic loss. 
D)  firm is making an economic profit.

Question 17

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

Accepted Answer

A) True 
 B)False

Question 18

In the long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit.

Accepted Answer

A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot

Question 19

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

Accepted Answer

To determine the quantity produced, the

Question 20

When firms in monopolistic competition are making an economic profit, firms will

Accepted Answer

A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms.

In monopolistic competition, firms can make an economic profit in

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Which of the following is NOT a true statement about perfectly competitive and monopolistically competitive firms?

Small pizza parlors exist in just about every town. Anyone can open a pizza parlor, and the pizzas from one parlor typically have different tastes and sizes than pizzas from another parlor. Thus, the pizza industry is an example of

Monopolistic competition is a market structure in which

In the short run, a firm in monopolistic competition produces where

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift and the MR curve will shift .

Which of the following four firms would most likely be part of a monopolistically competitive market?

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

Why would a firm in a monopolistically competitive industry ever advertise?

-The above figure shows a monopolistically competitive firm. The figure

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 firm's markup?

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for about $200 a pair. What would happen if J Brand priced their jeans at $220 per pair?

-In the figure above, the firm's economic

-The above figure is for a firm in monopolistic competition. The diagram represents the short run rather than the long run because the

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

In the long run, a monopolistically competitive firm make an economic profit and a monopoly make an economic profit.

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

When firms in monopolistic competition are making an economic profit, firms will

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

In monopolistic competition, firms can make an economic profit in

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Which of the following is NOT a true statement about perfectly competitive and monopolistically competitive firms?

Small pizza parlors exist in just about every town. Anyone can open a pizza parlor, and the pizzas from one parlor typically have different tastes and sizes than pizzas from another parlor. Thus, the pizza industry is an example of

Monopolistic competition is a market structure in which

In the short run, a firm in monopolistic competition produces where

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift ________ and the MR curve will shift ________.

Which of the following four firms would most likely be part of a monopolistically competitive market?

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

Why would a firm in a monopolistically competitive industry ever advertise?

-The above figure shows a monopolistically competitive firm. The figure

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 firm's markup?

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for about $200 a pair. What would happen if J Brand priced their jeans at $220 per pair?

-In the figure above, the firm's economic

-The above figure is for a firm in monopolistic competition. The diagram represents the short run rather than the long run because the

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

In the long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit.

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

When firms in monopolistic competition are making an economic profit, firms will

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

-The figure above shows a monopolistically competitive firm in the short run. During the transition to the long run, the demand curve will shift and the MR curve will shift .

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

In the long run, a monopolistically competitive firm make an economic profit and a monopoly make an economic profit.