Question 1

In the short run, for a firm in monopolistic competition

Accepted Answer

A)  the firm's economic profit must equal zero. 
B)  marginal revenue exceeds marginal cost. 
C)  price exceeds marginal cost. 
D)  the firm is a price taker. 
A)  the firm's economic profit must equal zero. 
B)  marginal revenue exceeds marginal cost. 
C)  price exceeds marginal cost. 
D)  the firm is a price taker.

Question 2

In the long-run, a firm in monopolistic competition has

Accepted Answer

A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price. 
A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price.

Question 3

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 $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

Accepted Answer

A)  J Brand will shut down in the short run and go out of business in the long run. 
B)  J Brand will produce in the short run but go out of business in the long run. 
C)  J Brand will produce in the short run and shut down in the long run. 
D)  J Brand will produce in the short and long run. 
A)  J Brand will shut down in the short run and go out of business in the long run. 
B)  J Brand will produce in the short run but go out of business in the long run. 
C)  J Brand will produce in the short run and shut down in the long run. 
D)  J Brand will produce in the short and long run.

Question 4

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

Accepted Answer

A)  P = ATC = MC = MR 
B)  P = ATC 
C)  ATC = MC 
D)  P = MC 
A)  P = ATC = MC = MR 
B)  P = ATC 
C)  ATC = MC 
D)  P = MC

Question 5

In the short run, a monopolistically competitive firm chooses

Accepted Answer

A)  both its price and its quantity. 
B)  its price but not its quantity. 
C)  its quantity but not its price. 
D)  neither its price nor its quantity. 
A)  both its price and its quantity. 
B)  its price but not its quantity. 
C)  its quantity but not its price. 
D)  neither its price nor its quantity.

Question 6

Advertising costs of a monopolistically competitive firm are

Accepted Answer

A)  greater than a monopoly and the same as a perfectly competitive firm. 
B)  greater than a perfectly competitive firm. 
C)  less than a perfectly competitive firm. 
D)  the same as a monopoly. 
A)  greater than a monopoly and the same as a perfectly competitive firm. 
B)  greater than a perfectly competitive firm. 
C)  less than a perfectly competitive firm. 
D)  the same as a monopoly.

Question 7

Firms in monopolistic competition can make an economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 8

Which characteristic is associated with monopolistic competition?

Accepted Answer

A)  collusion 
B)  product differentiation 
C)  small number of firms 
D)  awareness of rival firms in the market 
A)  collusion 
B)  product differentiation 
C)  small number of firms 
D)  awareness of rival firms in the market

Question 9

The best example of a good sold in a monopolistically competitive market is

Accepted Answer

A)  pizza. 
B)  corn. 
C)  sewer services. 
D)  peaches. 
A)  pizza. 
B)  corn. 
C)  sewer services. 
D)  peaches.

Question 10

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000 and the streaming price remains constant. What is Karaoke Channel Online's total profit before the advertising begins?

Accepted Answer

A)  $66,500 
B)  $99,500 
C)  $64,500 
D)  $76,500 
A)  $66,500 
B)  $99,500 
C)  $64,500 
D)  $76,500

Question 11

Firms in which type of market make zero economic profit in the long run?

Accepted Answer

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

Question 12

What is a firm's markup? What does it show?

Accepted Answer

A firm's markup is the amount

Question 13

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

Accepted Answer

The efficient scale is the quantity prod

Question 14

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves.
II) have marginal revenue curves that lie beneath their demand curves.
III) can make an economic profit in the long run.

Accepted Answer

A)  I only. 
B)  I and II. 
C)  I, II, and III. 
D)  I and III. 
A)  I only. 
B)  I and II. 
C)  I, II, and III. 
D)  I and III.

Question 15

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. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Accepted Answer

A)  increase production. 
B)  decrease production. 
C)  not change its production because it is maximizing its profit. 
D)  Not enough information is given to determine what La Super Rica should do. 
A)  increase production. 
B)  decrease production. 
C)  not change its production because it is maximizing its profit. 
D)  Not enough information is given to determine what La Super Rica should do.

Question 16

All of the following characteristics apply to monopolistic competition EXCEPT

Accepted Answer

A)  a large number of firms compete. 
B)  each firm produces the same identical product. 
C)  firms compete on product quality, price, and marketing. 
D)  there are no barriers to enter or exit the industry. 
A)  a large number of firms compete. 
B)  each firm produces the same identical product. 
C)  firms compete on product quality, price, and marketing. 
D)  there are no barriers to enter or exit the industry.

Question 17

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

Accepted Answer

The key to long-run economic profits is

Question 18

In the long run, a firm in a monopolistically competitive industry has its price equal to its

Accepted Answer

A)  average total cost. 
B)  marginal cost. 
C)  marginal revenue. 
D)  elasticity of demand. 
A)  average total cost. 
B)  marginal cost. 
C)  marginal revenue. 
D)  elasticity of demand.

Question 19

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

Accepted Answer

A)  producing 8 units and charging a price of $5. 
B)  producing 8 units and charging a price of $15. 
C)  producing 16 units and charging a price of $10. 
D)  producing 20 units and charging a price of $25. 
A)  producing 8 units and charging a price of $5. 
B)  producing 8 units and charging a price of $15. 
C)  producing 16 units and charging a price of $10. 
D)  producing 20 units and charging a price of $25.

Question 20

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)  100 
B)  64 
C)  129 
D)  133 
A)  100 
B)  64 
C)  129 
D)  133

In the short run, for a firm in monopolistic competition

In the long-run, a firm in monopolistic competition has

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 $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

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

In the short run, a monopolistically competitive firm chooses

Advertising costs of a monopolistically competitive firm are

Firms in monopolistic competition can make an economic profit in the long run.

Which characteristic is associated with monopolistic competition?

The best example of a good sold in a monopolistically competitive market is

Firms in which type of market make zero economic profit in the long run?

What is a firm's markup? What does it show?

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make an economic profit in the long run.

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. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

All of the following characteristics apply to monopolistic competition EXCEPT

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

In the long run, a firm in a monopolistically competitive industry has its price equal to its

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

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.

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 the short run, for a firm in monopolistic competition

In the long-run, a firm in monopolistic competition has

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 $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

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

In the short run, a monopolistically competitive firm chooses

Advertising costs of a monopolistically competitive firm are

Firms in monopolistic competition can make an economic profit in the long run.

Which characteristic is associated with monopolistic competition?

The best example of a good sold in a monopolistically competitive market is

Firms in which type of market make zero economic profit in the long run?

What is a firm's markup? What does it show?

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make an economic profit in the long run.

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. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

All of the following characteristics apply to monopolistic competition EXCEPT

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

In the long run, a firm in a monopolistically competitive industry has its price equal to its

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

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.

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