Question 1

Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A)  P > demand and P = MR 
B)  ATC > demand and MR = MC 
C)  P > MC and demand = ATC 
D)  P  MR 
A)  P > demand and P = MR 
B)  ATC > demand and MR = MC 
C)  P > MC and demand = ATC 
D)  P  MR

Question 2

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.Which industry has the lowest concentration ratio?

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 3

A monopolistically competitive market

Accepted Answer

A)  has some features of monopoly and some features of competition. 
B)  has one large, dominant firm and many other smaller firms. 
C)  is difficult to enter. 
D)  occurs whenever firms earn zero economic profit. 
A)  has some features of monopoly and some features of competition. 
B)  has one large, dominant firm and many other smaller firms. 
C)  is difficult to enter. 
D)  occurs whenever firms earn zero economic profit.

Question 4

Table 16-6
Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling.
  
-Refer to Table 16-6.When maximizing profit,what price does Traci's charge for a haircut?

Accepted Answer

A)  $20 
B)  $25 
C)  $30 
D)  $35 
A)  $20 
B)  $25 
C)  $30 
D)  $35

Question 5

In markets where restrictions on advertising have been used to curtail competition,the U.S.courts have generally

Accepted Answer

A)  referred the matters of advertising restrictions to executive regulators. 
B)  enforced industry-wide agreements to restrict advertising. 
C)  been silent on the effect of explicit advertising restrictions. 
D)  overturned laws that prohibit advertising. 
A)  referred the matters of advertising restrictions to executive regulators. 
B)  enforced industry-wide agreements to restrict advertising. 
C)  been silent on the effect of explicit advertising restrictions. 
D)  overturned laws that prohibit advertising.

Question 6

Which of the following statements is not correct?

Accepted Answer

A)  Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs. 
B)  Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry. 
C)  Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry. 
D)  Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers. 
A)  Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs. 
B)  Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry. 
C)  Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry. 
D)  Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers.

Question 7

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
  
-Refer to Figure 16-9.In order to maximize its profit,the firm will choose to produce

Accepted Answer

A)  100 units of output. 
B)  between 100 and 133.33 units of output. 
C)  133.33 units of output. 
D)  154.92 units of output. 
A)  100 units of output. 
B)  between 100 and 133.33 units of output. 
C)  133.33 units of output. 
D)  154.92 units of output.

Question 8

Monopolistic competition is considered inefficient because

Accepted Answer

A)  price exceeds marginal cost. 
B)  output is excessive. 
C)  long-run profits are positive. 
D)  barriers to entry limit the number of firms in the market. 
A)  price exceeds marginal cost. 
B)  output is excessive. 
C)  long-run profits are positive. 
D)  barriers to entry limit the number of firms in the market.

Question 9

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
  
-Refer to Table 16-2.Which industry has the lowest concentration ratio?

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 10

A monopolistically competitive market has characteristics that are similar to

Accepted Answer

A)  a monopoly only. 
B)  a competitive firm only. 
C)  both a monopoly and a competitive firm. 
D)  neither a monopoly nor a competitive firm. 
A)  a monopoly only. 
B)  a competitive firm only. 
C)  both a monopoly and a competitive firm. 
D)  neither a monopoly nor a competitive firm.

Question 11

Which of the following is a characteristic of monopolistic competition?

Accepted Answer

A)  ownership of a key resource by a single firm 
B)  free entry 
C)  identical product 
D)  patents 
A)  ownership of a key resource by a single firm 
B)  free entry 
C)  identical product 
D)  patents

Question 12

A concentration ratio

Accepted Answer

A)  measures the percentage of total output supplied by the four largest firms in the industry. 
B)  reflects the level of competition in an industry. 
C)  is related to the control that each firm has over price. 
D)  All of the above are correct. 
A)  measures the percentage of total output supplied by the four largest firms in the industry. 
B)  reflects the level of competition in an industry. 
C)  is related to the control that each firm has over price. 
D)  All of the above are correct.

Question 13

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following industries has the highest concentration ratio?

Accepted Answer

A)  wheat 
B)  novels 
C)  cigarettes 
D)  dog food 
A)  wheat 
B)  novels 
C)  cigarettes 
D)  dog food

Question 15

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Accepted Answer

A) P > ATC B) P = ATC C) P < ATC D) Any of the above could be correct. A) P > ATC B) P = ATC C) P < ATC D) Any of the above could be correct.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

Accepted Answer

Some people argue that celebrity endorse

Question 18

Monopolistic competition is the only market structure that features many sellers.

Accepted Answer

A) True 
 B)False

Question 19

As firms exit a monopolistically competitive market,profits of remaining firms

Accepted Answer

A)  decline, and product diversity in the market decreases. 
B)  decline, and product diversity in the market increases. 
C)  rise, and product diversity in the market decreases. 
D)  rise, and product diversity in the market increases. 
A)  decline, and product diversity in the market decreases. 
B)  decline, and product diversity in the market increases. 
C)  rise, and product diversity in the market decreases. 
D)  rise, and product diversity in the market increases.

Question 20

If we observe a great deal of advertising of dog food,we can infer that

Accepted Answer

A)  consumers spend very little of their disposable income on dog food. 
B)  dog food is cheap to produce. 
C)  dog food is a highly-differentiated product. 
D)  firms who do not advertise earn higher profits than those who do. 
A)  consumers spend very little of their disposable income on dog food. 
B)  dog food is cheap to produce. 
C)  dog food is a highly-differentiated product. 
D)  firms who do not advertise earn higher profits than those who do.

Exam 16: Monopolistic Competition.

Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

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.Which industry has the lowest concentration ratio?

A monopolistically competitive market

Table 16-6 Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling. -Refer to Table 16-6.When maximizing profit,what price does Traci's charge for a haircut?

In markets where restrictions on advertising have been used to curtail competition,the U.S.courts have generally

Which of the following statements is not correct?

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9.In order to maximize its profit,the firm will choose to produce

Monopolistic competition is considered inefficient because

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2.Which industry has the lowest concentration ratio?

A monopolistically competitive market has characteristics that are similar to

Which of the following is a characteristic of monopolistic competition?

A concentration ratio

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Which of the following industries has the highest concentration ratio?

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

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

Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

Monopolistic competition is the only market structure that features many sellers.

As firms exit a monopolistically competitive market,profits of remaining firms

If we observe a great deal of advertising of dog food,we can infer that

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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