Question 1

In both monopolistic competition and perfect competition,

Accepted Answer

A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same. 
A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same.

Question 2

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

Accepted Answer

A)  maximize; make zero economic profit 
B)  not maximize; make zero economic profit anyway 
C)  maximize; make an economic profit 
D)  not maximize; make an economic profit anyway 
E)  not maximize; incur an economic loss 
A)  maximize; make zero economic profit 
B)  not maximize; make zero economic profit anyway 
C)  maximize; make an economic profit 
D)  not maximize; make an economic profit anyway 
E)  not maximize; incur an economic loss

Question 3

-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.$12.00 per pizza
c

Question 4

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent,6 percent,7 percent,and 8 percent of total revenue?

Accepted Answer

A)  26 percent 
B)  174 percent 
C)  1,680 
D)  There is enough information given to answer the question, but none of the answers above is correct. 
E)  There is not enough information given to answer the question. 
A)  26 percent 
B)  174 percent 
C)  1,680 
D)  There is enough information given to answer the question, but none of the answers above is correct. 
E)  There is not enough information given to answer the question.

Question 5

Monopolistic competition is judged to be economically inefficient because

Accepted Answer

A)  the price is greater than marginal cost. 
B)  firms make zero economic profit in the long run. 
C)  marginal revenue equals marginal cost. 
D)  firms have deficient capacity in the long run. 
E)  firms make an economic profit in the long run. 
A)  the price is greater than marginal cost. 
B)  firms make zero economic profit in the long run. 
C)  marginal revenue equals marginal cost. 
D)  firms have deficient capacity in the long run. 
E)  firms make an economic profit in the long run.

Question 6

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.What price will Kevin charge per session?

Accepted Answer

A)  $100 
B)  $60 
C)  $40 
D)  $20 
E)  $80 
A)  $100 
B)  $60 
C)  $40 
D)  $20 
E)  $80

Question 7

If the Herfindahl-Hirschman Index for an industry is 8,528,is the industry competitive or concentrated?

Accepted Answer

With a Herfindahl-Hirschman In

Question 8

At a long-run equilibrium in monopolistic competition,price equals

Accepted Answer

A)  average total cost. 
B)  marginal cost but not marginal revenue. 
C)  marginal revenue but not marginal cost. 
D)  zero. 
E)  marginal revenue and marginal cost. 
A)  average total cost. 
B)  marginal cost but not marginal revenue. 
C)  marginal revenue but not marginal cost. 
D)  zero. 
E)  marginal revenue and marginal cost.

Question 9

In monopolistic competition,each firm supplies a small part of the market.This occurs because

Accepted Answer

A)  there are barriers to entry. 
B)  there are no barriers to exit. 
C)  there are a large number of firms. 
D)  firms produce differentiated products. 
E)  there are a large number of buyers. 
A)  there are barriers to entry. 
B)  there are no barriers to exit. 
C)  there are a large number of firms. 
D)  firms produce differentiated products. 
E)  there are a large number of buyers.

Question 10

An industry with a large number of firms,differentiated products,and free entry and exit is called

Accepted Answer

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

Question 11

Which of the following is NOTa characteristic of long-run equilibrium in monopolistic competition?

Accepted Answer

A)  The firm makes zero economic profit. 
B)  Price is equal to average total cost. 
C)  Production occurs at minimum average total cost. 
D)  Marginal revenue is equal to marginal cost. 
E)  Price exceeds marginal revenue. 
A)  The firm makes zero economic profit. 
B)  Price is equal to average total cost. 
C)  Production occurs at minimum average total cost. 
D)  Marginal revenue is equal to marginal cost. 
E)  Price exceeds marginal revenue.

Question 12

Monopolistic competition is defined as a type of market structure in which

Accepted Answer

A)  many firms produce the good. 
B)  firms produce a homogeneous good. 
C)  there are barriers to entry. 
D)  firms can make an economic profit in the long run. 
E)  firms can easily enter the market but cannot easily exit from it. 
A)  many firms produce the good. 
B)  firms produce a homogeneous good. 
C)  there are barriers to entry. 
D)  firms can make an economic profit in the long run. 
E)  firms can easily enter the market but cannot easily exit from it.

Question 13

$$\begin{array} { c c } 
\text { Firm } & \begin{array} { c } 
\text { Market share } \
\text { (percent) }
\end{array} \
\hline \text { Gary's Gourmet } & 30 \
\text { Allen's Extras } & 25 \
\text { Travis' Treats } & 15 \
\text { Orin's Eats } & 10 \
\text { Reed's Riches } & 10 \
\text { Seth's Sweetest } & 5 \
\text { Uriah's Foodfest } & 5 \
\hline
\end{array}$$
-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

Accepted Answer

A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20 
A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20

Question 14

In monopolistic competition,a firm can set the price for its product because of

Accepted Answer

A)  easy entry and exit. 
B)  economic profits. 
C)  product differentiation. 
D)  many competitors. 
E)  the firm's upward sloping demand curve. 
A)  easy entry and exit. 
B)  economic profits. 
C)  product differentiation. 
D)  many competitors. 
E)  the firm's upward sloping demand curve.

Question 15

A monopolistically competitive firm ________ have excess capacity because its ________.

Accepted Answer

A)  does; demand curve is downward sloping 
B)  does not; demand curve is downward sloping 
C)  does; average total cost curve is U-shaped 
D)  does not; average total cost curve is U-shaped 
E)  does; marginal revenue curve lies below its demand curve 
A)  does; demand curve is downward sloping 
B)  does not; demand curve is downward sloping 
C)  does; average total cost curve is U-shaped 
D)  does not; average total cost curve is U-shaped 
E)  does; marginal revenue curve lies below its demand curve

Question 16

If firms in monopolistic competition are making economic profits,then

Accepted Answer

A)  they can expect to earn the profits indefinitely. 
B)  new rivals enter the industry and the demand for any seller's good decreases. 
C)  the market demand becomes more inelastic. 
D)  the industry is in long-run equilibrium. 
E)  new rivals enter the industry and the demand for any seller's good increases. 
A)  they can expect to earn the profits indefinitely. 
B)  new rivals enter the industry and the demand for any seller's good decreases. 
C)  the market demand becomes more inelastic. 
D)  the industry is in long-run equilibrium. 
E)  new rivals enter the industry and the demand for any seller's good increases.

Question 17

In monopolistic competition,the entry of new firms

Accepted Answer

A)  shifts existing firms' demand curves rightward. 
B)  shifts existing firms' demand curves leftward. 
C)  only results in a movement along the existing firms' demand curves. 
D)  has no effect on the existing firms' demand curves. 
E)  shifts existing firms' supply curves rightward. 
A)  shifts existing firms' demand curves rightward. 
B)  shifts existing firms' demand curves leftward. 
C)  only results in a movement along the existing firms' demand curves. 
D)  has no effect on the existing firms' demand curves. 
E)  shifts existing firms' supply curves rightward.

Question 18

In the long run in monopolistic competition,firms

Accepted Answer

A)  can make an economic profit. 
B)  incur an economic loss. 
C)  make zero economic profit. 
D)  shut down if they are making zero economic profit. 
E)  make either an economic profit or zero economic profit. 
A)  can make an economic profit. 
B)  incur an economic loss. 
C)  make zero economic profit. 
D)  shut down if they are making zero economic profit. 
E)  make either an economic profit or zero economic profit.

Question 19

If a large number of firms are competing,the market could be

Accepted Answer

A)  perfect competition or monopolistic competition. 
B)  perfect competition or monopoly. 
C)  monopolistic competition or oligopoly. 
D)  monopolistic competition or monopoly. 
E)  oligopoly or monopoly. 
A)  perfect competition or monopolistic competition. 
B)  perfect competition or monopoly. 
C)  monopolistic competition or oligopoly. 
D)  monopolistic competition or monopoly. 
E)  oligopoly or monopoly.

Question 20

In the long run,firms in monopolistic competition make zero economic profit because

Accepted Answer

A)  firms are free to enter and exit. 
B)  their products are similar but slightly different. 
C)  of over-reliance on product marketing. 
D)  of collusion among the various sellers. 
E)  their demand curves are horizontal. 
A)  firms are free to enter and exit. 
B)  their products are similar but slightly different. 
C)  of over-reliance on product marketing. 
D)  of collusion among the various sellers. 
E)  their demand curves are horizontal.

In both monopolistic competition and perfect competition,

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will his profit and will .

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent,6 percent,7 percent,and 8 percent of total revenue?

Monopolistic competition is judged to be economically inefficient because

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.What price will Kevin charge per session?

If the Herfindahl-Hirschman Index for an industry is 8,528,is the industry competitive or concentrated?

At a long-run equilibrium in monopolistic competition,price equals

In monopolistic competition,each firm supplies a small part of the market.This occurs because

An industry with a large number of firms,differentiated products,and free entry and exit is called

Which of the following is NOTa characteristic of long-run equilibrium in monopolistic competition?

Monopolistic competition is defined as a type of market structure in which

Firm Market share (percent) Gary's Gourmet 30 Allen's Extras 25 Travis' Treats 15 Orin's Eats 10 Reed's Riches 10 Seth's Sweetest 5 Uriah's Foodfest 5 -Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

In monopolistic competition,a firm can set the price for its product because of

A monopolistically competitive firm have excess capacity because its .

If firms in monopolistic competition are making economic profits,then

In monopolistic competition,the entry of new firms

In the long run in monopolistic competition,firms

If a large number of firms are competing,the market could be

In the long run,firms in monopolistic competition make zero economic profit because

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 17: Monopolistic Competition

In both monopolistic competition and perfect competition,

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent,6 percent,7 percent,and 8 percent of total revenue?

Monopolistic competition is judged to be economically inefficient because

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.What price will Kevin charge per session?

If the Herfindahl-Hirschman Index for an industry is 8,528,is the industry competitive or concentrated?

At a long-run equilibrium in monopolistic competition,price equals

In monopolistic competition,each firm supplies a small part of the market.This occurs because

An industry with a large number of firms,differentiated products,and free entry and exit is called

Which of the following is NOTa characteristic of long-run equilibrium in monopolistic competition?

Monopolistic competition is defined as a type of market structure in which

Firm Market share (percent) Gary's Gourmet 30 Allen's Extras 25 Travis' Treats 15 Orin's Eats 10 Reed's Riches 10 Seth's Sweetest 5 Uriah's Foodfest 5 -Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

In monopolistic competition,a firm can set the price for its product because of

A monopolistically competitive firm ________ have excess capacity because its ________.

If firms in monopolistic competition are making economic profits,then

In monopolistic competition,the entry of new firms

In the long run in monopolistic competition,firms

If a large number of firms are competing,the market could be

In the long run,firms in monopolistic competition make zero economic profit because

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will his profit and will .

A monopolistically competitive firm have excess capacity because its .