Exam 16: Monopolistic Competition.

Olivia consumes Pepsi exclusively.She claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in her mouth.However,in a blind taste test,Olivia is found to prefer generic store-brand cola to Pepsi eight out of ten times.The results of Olivia's taste test would reinforce claims by critics of brand names that

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.Efficient scale is reached

Figure 16-7 The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms. -Refer to Figure 16-7.Which of the diagrams illustrates the impact of some existing firms leaving the market?

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

In a monopolistically competitive market,the number of firms adjusts until economic profits are driven to zero.

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Figure 16-5 -Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

In which of the following markets is economic profit driven to zero in the long run?

Critics of advertising argue that in some markets advertising may

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 price would a profit-maximizing monopolist charge for the product?

Figure 16-3 -Refer to Figure 16-3.Which of the following will occur in the long run in this industry?

Economists defend brand names as useful to consumers because brand names

The deadweight loss that is associated with a monopolistically competitive market is a result of

A monopolistically competitive market is like both a competitive market and a monopoly in that firms in all three market structures

A firm is a price taker

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.Which of the following is likely to happen in the long run in this 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.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

When existing firms lose customers and profits due to entry of a new competitor,a

The primary claim of defenders of advertising is that it