Question 1

A firm in ________ will engage in ________ to try to earn an economic profit.

Accepted Answer

A)  perfect competition; advertising 
B)  monopolistic competition; product differentiation 
C)  perfect competition; price wars 
D)  monopolistic competition; price wars 
A)  perfect competition; advertising 
B)  monopolistic competition; product differentiation 
C)  perfect competition; price wars 
D)  monopolistic competition; price wars

Question 2

In monopolistic competition, in the short run a firm maximizes its profit by selecting an output at which marginal cost equals

Accepted Answer

A)  average total cost. 
B)  marginal revenue. 
C)  price. 
D)  zero. 
A)  average total cost. 
B)  marginal revenue. 
C)  price. 
D)  zero.

Question 3

A monopolistically competitive firm is like a monopoly firm insofar as

Accepted Answer

A)  both face perfectly elastic demand. 
B)  both earn an economic profit in the long run. 
C)  both have MR curves that lie below their demand curves. 
D)  neither is protected by high barriers to entry. 
A)  both face perfectly elastic demand. 
B)  both earn an economic profit in the long run. 
C)  both have MR curves that lie below their demand curves. 
D)  neither is protected by high barriers to entry.

Question 4

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, what is Gap's economic profit?

Accepted Answer

A)  zero 
B)  $5,000 
C)  -$5,000 
D)  -$1,160 
A)  zero 
B)  $5,000 
C)  -$5,000 
D)  -$1,160

Question 5

In monopolistic competition, a firm must determine what price to set for its good because

Accepted Answer

A)  the demand for its good is not perfectly elastic. 
B)  the demand for its good is perfectly elastic. 
C)  there are many buyers. 
D)  there are many sellers. 
A)  the demand for its good is not perfectly elastic. 
B)  the demand for its good is perfectly elastic. 
C)  there are many buyers. 
D)  there are many sellers.

Question 6

-The above figure represents Tony's Pizza Parlor, a firm in monopolistic competition.
a) What quantity will be produced?
b) What price will be charged?
c) What is Tony's total cost?
d) What is Tony's total revenue?
e) What is Tony's economic profit or loss?
f) Is this a long-run equilibrium? Why or why not?

Accepted Answer

a) 40 pizzas per day
b) $12 per pizza
c)

Question 7

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm makes the maximum profit when the marginal cost of last item produced equals

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

Question 8

Which of the following is NOT true of monopolistic competition?

Accepted Answer

A)  Firms produce a good that is a perfect substitute for their competitors' goods. 
B)  There is free entry and exit. 
C)  There are a large number of firms. 
D)  Firms can compete on price and quality. 
A)  Firms produce a good that is a perfect substitute for their competitors' goods. 
B)  There is free entry and exit. 
C)  There are a large number of firms. 
D)  Firms can compete on price and quality.

Question 9

-The firm in the figure above is in monopolistic competition. It will produce

Accepted Answer

A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units. 
A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units.

Question 10

Which of the following is ALWAYS true regarding a profit maximizing monopolistically competitive firm in short-run equilibrium?

Accepted Answer

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

Question 11

In monopolistic competition

Accepted Answer

A)  each firm's price can deviate from the average price of other firms. 
B)  each firm supplies a large part of the total market output. 
C)  one firm's actions directly affect the actions of the other firms. 
D)  firms typically determine the amount they produce through agreements with competitors. 
A)  each firm's price can deviate from the average price of other firms. 
B)  each firm supplies a large part of the total market output. 
C)  one firm's actions directly affect the actions of the other firms. 
D)  firms typically determine the amount they produce through agreements with competitors.

Question 12

Draw an example of a firm in monopolistic competition that is earning an economic profit. Be sure to label all the curves. Indicate the area that equals the firm's economic profit.

Accepted Answer

@#IMG-DLM& The completed figur

Question 13

In monopolistic competition

Accepted Answer

A)  each firm's price cannot deviate from the average price of other firms. 
B)  each firm supplies a small part of the total market output. 
C)  one firm's actions directly affect the actions of the other firms. 
D)  collusion is possible. 
A)  each firm's price cannot deviate from the average price of other firms. 
B)  each firm supplies a small part of the total market output. 
C)  one firm's actions directly affect the actions of the other firms. 
D)  collusion is possible.

Question 14

Which of the following is NOT a characteristic of monopolistic competition?

Accepted Answer

A)  There is easy entry and exit. 
B)  Firms may make an economic profit in the short run. 
C)  There is product differentiation in the market. 
D)  Firms set the price of their product equal to their marginal cost. 
A)  There is easy entry and exit. 
B)  Firms may make an economic profit in the short run. 
C)  There is product differentiation in the market. 
D)  Firms set the price of their product equal to their marginal cost.

Question 15

In the long run, firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Accepted Answer

A)  less than 
B)  equal to 
C)  more than 
D)  All of the above are possible depending on market conditions. 
A)  less than 
B)  equal to 
C)  more than 
D)  All of the above are possible depending on market conditions.

Question 16

Brand name drugs are chemically identical to their generic counterparts. Yet, consumers often prefer the brand name product to the generic product. Making consumers think that a brand name drug differs from its generic counterpart is an example of

Accepted Answer

A)  product differentiation. 
B)  perfect competition. 
C)  oligopolistic behavior. 
D)  price taking behavior. 
A)  product differentiation. 
B)  perfect competition. 
C)  oligopolistic behavior. 
D)  price taking behavior.

Question 17

Dole Co. operates in a monopolistically competitive market. To try to earn an economic profit, Dole Co. will

Accepted Answer

A)  prevent other firms from entering the market. 
B)  increase its product's price. 
C)  continually seek to differentiate its product. 
D)  increase output. 
A)  prevent other firms from entering the market. 
B)  increase its product's price. 
C)  continually seek to differentiate its product. 
D)  increase output.

Question 18

-The figure above could represent the long-run equilibrium for a

Accepted Answer

A)  perfectly competitive firm. 
B)  monopolistically competitive firm. 
C)  monopoly. 
D)  firm facing inelastic demand at all outputs. 
A)  perfectly competitive firm. 
B)  monopolistically competitive firm. 
C)  monopoly. 
D)  firm facing inelastic demand at all outputs.

Question 19

In monopolistically competitive industries

Accepted Answer

A)  entry and exit push economic profits toward zero. 
B)  there is no diversity of products. 
C)  firms do not respond to changes in demand. 
D)  firms produce where marginal cost equals the marginal benefit to the consumers. 
A)  entry and exit push economic profits toward zero. 
B)  there is no diversity of products. 
C)  firms do not respond to changes in demand. 
D)  firms produce where marginal cost equals the marginal benefit to the consumers.

Question 20

Which of the following is NOT a characteristic of the market structure for monopolistic competition?

Accepted Answer

A)  Firms are free to enter and exit. 
B)  Firms are price takers. 
C)  Firms compete on product quality, price, and marketing. 
D)  There are a large number of firms. 
A)  Firms are free to enter and exit. 
B)  Firms are price takers. 
C)  Firms compete on product quality, price, and marketing. 
D)  There are a large number of firms.

A firm in will engage in to try to earn an economic profit.

In monopolistic competition, in the short run a firm maximizes its profit by selecting an output at which marginal cost equals

A monopolistically competitive firm is like a monopoly firm insofar as

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, what is Gap's economic profit?

In monopolistic competition, a firm must determine what price to set for its good because

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm makes the maximum profit when the marginal cost of last item produced equals

Which of the following is NOT true of monopolistic competition?

-The firm in the figure above is in monopolistic competition. It will produce

Which of the following is ALWAYS true regarding a profit maximizing monopolistically competitive firm in short-run equilibrium?

In monopolistic competition

Draw an example of a firm in monopolistic competition that is earning an economic profit. Be sure to label all the curves. Indicate the area that equals the firm's economic profit.

In monopolistic competition

Which of the following is NOT a characteristic of monopolistic competition?

In the long run, firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Brand name drugs are chemically identical to their generic counterparts. Yet, consumers often prefer the brand name product to the generic product. Making consumers think that a brand name drug differs from its generic counterpart is an example of

Dole Co. operates in a monopolistically competitive market. To try to earn an economic profit, Dole Co. will

-The figure above could represent the long-run equilibrium for a

In monopolistically competitive industries

Which of the following is NOT a characteristic of the market structure for monopolistic competition?

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 firm in ________ will engage in ________ to try to earn an economic profit.

In monopolistic competition, in the short run a firm maximizes its profit by selecting an output at which marginal cost equals

A monopolistically competitive firm is like a monopoly firm insofar as

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, what is Gap's economic profit?

In monopolistic competition, a firm must determine what price to set for its good because

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm makes the maximum profit when the marginal cost of last item produced equals

Which of the following is NOT true of monopolistic competition?

-The firm in the figure above is in monopolistic competition. It will produce

Which of the following is ALWAYS true regarding a profit maximizing monopolistically competitive firm in short-run equilibrium?

In monopolistic competition

Draw an example of a firm in monopolistic competition that is earning an economic profit. Be sure to label all the curves. Indicate the area that equals the firm's economic profit.

In monopolistic competition

Which of the following is NOT a characteristic of monopolistic competition?

In the long run, firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Brand name drugs are chemically identical to their generic counterparts. Yet, consumers often prefer the brand name product to the generic product. Making consumers think that a brand name drug differs from its generic counterpart is an example of

Dole Co. operates in a monopolistically competitive market. To try to earn an economic profit, Dole Co. will

-The figure above could represent the long-run equilibrium for a

In monopolistically competitive industries

Which of the following is NOT a characteristic of the market structure for monopolistic competition?

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

A firm in will engage in to try to earn an economic profit.