Question 1

A monopolistically competitive market is like a monopoly in that

Accepted Answer

A)  both market structures feature easy entry by new firms in the long run. 
B)  the main objective of firms in both market structures is something other than profit maximization. 
C)  firms in both market structures produce the welfare-maximizing level of output. 
D)  firms in both market structures set price above marginal cost. 
A)  both market structures feature easy entry by new firms in the long run. 
B)  the main objective of firms in both market structures is something other than profit maximization. 
C)  firms in both market structures produce the welfare-maximizing level of output. 
D)  firms in both market structures set price above marginal cost.

Question 2

Most businesses advertise their products and services.Some business use SPAM emails to advertise because the cost of a mass e-mail is close to zero.Other business spend millions of dollars to advertise in a 30-second spot during the Super Bowl.Having observed this real world data,economists argue that the amount of money that a business spends on advertising is a proxy for a good or service's

Accepted Answer

A)  size. 
B)  quality. 
C)  newness. 
D)  cost of production. 
A)  size. 
B)  quality. 
C)  newness. 
D)  cost of production.

Question 3

In monopolistically competitive markets,positive economic profits

Accepted Answer

A)  suggest that some existing firms will exit the market. 
B)  suggest that new firms will enter the market. 
C)  are sustained through government-imposed barriers to entry. 
D)  are never possible. 
A)  suggest that some existing firms will exit the market. 
B)  suggest that new firms will enter the market. 
C)  are sustained through government-imposed barriers to entry. 
D)  are never possible.

Question 4

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Accepted Answer

A)  the demand curve will be perfectly elastic. 
B)  price exceeds marginal cost. 
C)  marginal cost must be falling. 
D)  marginal revenue exceeds marginal cost. 
A)  the demand curve will be perfectly elastic. 
B)  price exceeds marginal cost. 
C)  marginal cost must be falling. 
D)  marginal revenue exceeds marginal cost.

Question 5

Edward Chamberlin argued that governments should

Accepted Answer

A)  ban the use of brand names. 
B)  not enforce the trademarks that companies use to identify their products. 
C)  vigorously enforce the trademarks that companies use to identify their products. 
D)  tax companies whose products have brand names in proportion to how much consumers recognize their products. 
A)  ban the use of brand names. 
B)  not enforce the trademarks that companies use to identify their products. 
C)  vigorously enforce the trademarks that companies use to identify their products. 
D)  tax companies whose products have brand names in proportion to how much consumers recognize their products.

Question 6

Figure 16-4
  
-Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Accepted Answer

A)  panel a 
B)  panel b 
C)  panel c 
D)  panel d 
A)  panel a 
B)  panel b 
C)  panel c 
D)  panel d

Question 7

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Accepted Answer

A)  price may exceed marginal revenue, but in the long run, price equals marginal revenue. 
B)  price may exceed marginal cost, but in the long run, price equals marginal cost. 
C)  price may exceed average total cost, but in the long run, price equals average total cost. 
D)  there are many firms in the market, but in the long run, there are only a few firms in the market. 
A)  price may exceed marginal revenue, but in the long run, price equals marginal revenue. 
B)  price may exceed marginal cost, but in the long run, price equals marginal cost. 
C)  price may exceed average total cost, but in the long run, price equals average total cost. 
D)  there are many firms in the market, but in the long run, there are only a few firms in the market.

Question 8

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Accepted Answer

A)  natural monopoly 
B)  perfectly competition 
C)  monopolistic competition 
D)  monopoly 
A)  natural monopoly 
B)  perfectly competition 
C)  monopolistic competition 
D)  monopoly

Question 9

Which of the following statements is not correct?

Accepted Answer

A)  Critics of advertising argue that firms advertise to manipulate consumers' tastes. 
B)  Defenders of advertising argue that advertising provides valuable product information to consumers. 
C)  An industry with many brand name products will be more competitive than one with many generic products. 
D)  The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product. 
A)  Critics of advertising argue that firms advertise to manipulate consumers' tastes. 
B)  Defenders of advertising argue that advertising provides valuable product information to consumers. 
C)  An industry with many brand name products will be more competitive than one with many generic products. 
D)  The willingness of a firm to spend a large amount of money on advertising can signal the quality of the product.

Question 10

A firm produces the welfare-maximizing level of output

Accepted Answer

A)  only when the market is perfectly competitive. 
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 perfectly competitive. 
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 11

In which of the following product markets are we likely to observe the largest amount of advertising?

Accepted Answer

A)  markets with highly differentiated products 
B)  perfectly competitive markets 
C)  markets in which industrial products are sold 
D)  markets in which there is very little difference between different firms' products 
A)  markets with highly differentiated products 
B)  perfectly competitive markets 
C)  markets in which industrial products are sold 
D)  markets in which there is very little difference between different firms' products

Question 12

A monopolistically competitive firm chooses

Accepted Answer

A)  the quantity of output to produce, but the market determines price. 
B)  the price, but competition in the market determines the quantity. 
C)  price, but output is determined by a cartel production quota. 
D)  the quantity of output to produce and the price at which it will sell its output. 
A)  the quantity of output to produce, but the market determines price. 
B)  the price, but competition in the market determines the quantity. 
C)  price, but output is determined by a cartel production quota. 
D)  the quantity of output to produce and the price at which it will sell its output.

Question 13

Critics of advertising argue that advertising

Accepted Answer

A)  creates desires that otherwise might not exist. 
B)  enhances competition. 
C)  benefits television viewers who enjoy tv commercials. 
D)  All of the above are correct. 
A)  creates desires that otherwise might not exist. 
B)  enhances competition. 
C)  benefits television viewers who enjoy tv commercials. 
D)  All of the above are correct.

Question 14

In monopolistic competition as well as in monopoly,

Accepted Answer

A)  price exceeds marginal revenue for each firm. 
B)  profit is zero in a long-run equilibrium for each firm. 
C)  entry and exit by firms are unrestricted. 
D)  there are at most a few firms in each market. 
A)  price exceeds marginal revenue for each firm. 
B)  profit is zero in a long-run equilibrium for each firm. 
C)  entry and exit by firms are unrestricted. 
D)  there are at most a few firms in each market.

Question 15

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

Accepted Answer

Business-stealing effect: if new entrant

Question 16

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.Based on the concentration ratio,which industry is the least competitive?

Accepted Answer

A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D 
A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D

Question 17

Figure 16-8
The figure is drawn for a monopolistically-competitive firm.
  
-Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

Accepted Answer

A)  efficient scale of the firm. 
B)  short-run equilibrium quantity of output for the firm. 
C)  long-run equilibrium quantity of output for the firm. 
D)  All of the above are correct. 
A)  efficient scale of the firm. 
B)  short-run equilibrium quantity of output for the firm. 
C)  long-run equilibrium quantity of output for the firm. 
D)  All of the above are correct.

A monopolistically competitive market is like a monopoly in that

In monopolistically competitive markets,positive economic profits

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Edward Chamberlin argued that governments should

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Which of the following statements is not correct?

A firm produces the welfare-maximizing level of output

In which of the following product markets are we likely to observe the largest amount of advertising?

A monopolistically competitive firm chooses

Critics of advertising argue that advertising

In monopolistic competition as well as in monopoly,

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

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.Based on the concentration ratio,which industry is the least competitive?

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

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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Exam 16: Monopolistic Competition.

A monopolistically competitive market is like a monopoly in that

In monopolistically competitive markets,positive economic profits

When a profit-maximizing firm in a monopolistically competitive market is in long-run equilibrium,

Edward Chamberlin argued that governments should

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Select the type of market that is described by the following attributes: many firms,differentiated products,and free entry.

Which of the following statements is not correct?

A firm produces the welfare-maximizing level of output

In which of the following product markets are we likely to observe the largest amount of advertising?

A monopolistically competitive firm chooses

Critics of advertising argue that advertising

In monopolistic competition as well as in monopoly,

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already.Statistics show that vacancy rates average 15 percent during any given semester."

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.Based on the concentration ratio,which industry is the least competitive?

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.The quantity of output at which the MC and ATC curves cross is the

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.

Filters