Question 1

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Accepted Answer

A) True 
 B)False

Question 2

Figure 16-2
This figure depicts a situation in a monopolistically competitive market.
  
-Refer to Figure 16-2.This firm is operating

Accepted Answer

A)  in the short run and earning a positive economic profit. 
B)  in the short run and breaking even. 
C)  in the long run and earning a positive economic profit. 
D)  in the long run and incurring and economic loss. 
A)  in the short run and earning a positive economic profit. 
B)  in the short run and breaking even. 
C)  in the long run and earning a positive economic profit. 
D)  in the long run and incurring and economic loss.

Question 3

In the long run,a monopolistically competitive firm produces a quantity that is

Accepted Answer

A)  equal to the efficient scale. 
B)  less than the efficient scale. 
C)  greater than the efficient scale. 
D)  consistent with diseconomies of scale. 
A)  equal to the efficient scale. 
B)  less than the efficient scale. 
C)  greater than the efficient scale. 
D)  consistent with diseconomies of scale.

Question 4

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
  
-Refer to Table 16-4.What price will this firm charge to maximize profit?

Accepted Answer

A)  $6 
B)  $7 
C)  $8 
D)  $9 
A)  $6 
B)  $7 
C)  $8 
D)  $9

Question 5

Under which of the following market structures would the highest output of a particular good be produced?

Accepted Answer

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

Question 6

If firms in a monopolistically competitive market are incurring economic losses,which of the following scenarios would best describe the change remaining firms would face as the market adjusts to the long-run equilibrium?

Accepted Answer

A)  a downward shift in the marginal cost curve for each firm 
B)  an upward shift in the marginal cost curve for each firm 
C)  a decrease in demand for each firm 
D)  an increase in demand for each firm 
A)  a downward shift in the marginal cost curve for each firm 
B)  an upward shift in the marginal cost curve for each firm 
C)  a decrease in demand for each firm 
D)  an increase in demand for each firm

Question 7

Crude oil is primarily supplied to the world market by a few Middle Eastern countries.Such a market is an example of a(n)
(i)imperfectly competitive market.
(ii)monopoly market.
(iii)oligopoly market.

Accepted Answer

A)  (i) and (ii) only 
B)  (ii) and (iii) only 
C)  (i) and (iii) only 
D)  (iii) only 
A)  (i) and (ii) only 
B)  (ii) and (iii) only 
C)  (i) and (iii) only 
D)  (iii) only

Question 8

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.
  
-Refer to Table 16-3.What is the concentration ratio for Industry B?

Accepted Answer

A)  approximately 46% 
B)  approximately 54% 
C)  approximately 57% 
D)  approximately 61% 
A)  approximately 46% 
B)  approximately 54% 
C)  approximately 57% 
D)  approximately 61%

Question 9

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios would best describe the change existing firms would face as the market adjusts to the long-run equilibrium?

Accepted Answer

A)  an increase in demand for each firm 
B)  a decrease in demand for each firm 
C)  a downward shift in the marginal cost curve for each firm 
D)  an upward shift in the marginal cost curve for each firm 
A)  an increase in demand for each firm 
B)  a decrease in demand for each firm 
C)  a downward shift in the marginal cost curve for each firm 
D)  an upward shift in the marginal cost curve for each firm

Question 10

A firm operating in a monopolistically competitive market can earn economic profits 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 11

In both perfect competition and monopolistic competition,each firm

Accepted Answer

A)  has some monopoly power. 
B)  sells a product that is at least slightly different from those of other firms. 
C)  faces a downward-sloping demand curve. 
D)  has many competitors. 
A)  has some monopoly power. 
B)  sells a product that is at least slightly different from those of other firms. 
C)  faces a downward-sloping demand curve. 
D)  has many competitors.

Question 12

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Accepted Answer

A)  firms would most likely experience economic losses. 
B)  firms would also operate at their efficient scale. 
C)  new firms would likely to enter the market. 
D)  the most efficient firms would not likely to be affected. 
A)  firms would most likely experience economic losses. 
B)  firms would also operate at their efficient scale. 
C)  new firms would likely to enter the market. 
D)  the most efficient firms would not likely to be affected.

Question 13

A firm that would experience higher average total cost by increasing production is operating with excess capacity.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 16-3
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-3.If the marginal cost of producing this good is 4,what quantity would a profit-maximizing monopolist produce?

Accepted Answer

A)  Q = 2 
B)  Q = 4 
C)  Q = 6 
D)  Q = 8 
A)  Q = 2 
B)  Q = 4 
C)  Q = 6 
D)  Q = 8

Question 15

Because monopolistically competitive firms produce differentiated products,each firm

Accepted Answer

A)  faces a demand curve that is horizontal. 
B)  faces a demand curve that is vertical. 
C)  has no control over product price. 
D)  has some control over product price. 
A)  faces a demand curve that is horizontal. 
B)  faces a demand curve that is vertical. 
C)  has no control over product price. 
D)  has some control over product price.

Question 16

The product-variety externality and the business-stealing externality are both spillover costs of new firms entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 17

A firm can earn economic profits in the long run

Accepted Answer

A)  only when the market is a monopoly. 
B)  only when the market is a monopoly or monopolistically competitive. 
C)  only when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistic. 
A)  only when the market is a monopoly. 
B)  only when the market is a monopoly or monopolistically competitive. 
C)  only when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistic.

Question 18

Figure 16-8
The figure is drawn for a monopolistically-competitive firm.
  
-Refer to Figure 16-8.The firm's maximum profit is

Accepted Answer

A)  $-5,000.00. 
B)  $0. 
C)  $5,000.00. 
D)  $8,887.78. 
A)  $-5,000.00. 
B)  $0. 
C)  $5,000.00. 
D)  $8,887.78.

Question 19

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
  
-Refer to Figure 16-9.When the firm is maximizing its profit,

Accepted Answer

A)  TR = $9,000 and TC =$16,000. 
B)  TR = $14,000 and TC =$16,000. 
C)  TR = $16,000 and TC =$16,000. 
D)  MC exceeds MR by $66.66 on the last unit of output produced. 
A)  TR = $9,000 and TC =$16,000. 
B)  TR = $14,000 and TC =$16,000. 
C)  TR = $16,000 and TC =$16,000. 
D)  MC exceeds MR by $66.66 on the last unit of output produced.

Question 20

Under which of the following market structures would consumers likely receive the most product variety?

Accepted Answer

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

Exam 16: Monopolistic Competition.

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.This firm is operating

In the long run,a monopolistically competitive firm produces a quantity that is

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.What price will this firm charge to maximize profit?

Under which of the following market structures would the highest output of a particular good be produced?

If firms in a monopolistically competitive market are incurring economic losses,which of the following scenarios would best describe the change remaining firms would face as the market adjusts to the long-run equilibrium?

Crude oil is primarily supplied to the world market by a few Middle Eastern countries.Such a market is an example of a(n) (i)imperfectly competitive market. (ii)monopoly market. (iii)oligopoly market.

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.What is the concentration ratio for Industry B?

If firms in a monopolistically competitive market are earning economic profits,which of the following scenarios would best describe the change existing firms would face as the market adjusts to the long-run equilibrium?

A firm operating in a monopolistically competitive market can earn economic profits in

In both perfect competition and monopolistic competition,each firm

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

A firm that would experience higher average total cost by increasing production is operating with excess capacity.

Scenario 16-3 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-3.If the marginal cost of producing this good is 4,what quantity would a profit-maximizing monopolist produce?

Because monopolistically competitive firms produce differentiated products,each firm

The product-variety externality and the business-stealing externality are both spillover costs of new firms entering a monopolistically competitive market.

A firm can earn economic profits in the long run

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.The firm's maximum profit is

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9.When the firm is maximizing its profit,

Under which of the following market structures would consumers likely receive the most product variety?

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.

Application: 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 Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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