Question 1

The marginal revenue curve facing a monopolistically competitive firm

Accepted Answer

A)  lies on its demand curve. 
B)  lies above its demand curve. 
C)  lies below its demand curve. 
D)  is equal to its price curve. 
E)  is parallel to its demand curve. 
A)  lies on its demand curve. 
B)  lies above its demand curve. 
C)  lies below its demand curve. 
D)  is equal to its price curve. 
E)  is parallel to its demand curve.

Question 2

Concentration ratios

Accepted Answer

A)  refer to the concentration of customers in a certain area. 
B)  measure whether the market is dominated by a small number of firms. 
C)  measure the concentration of a large number of firms in a certain area. 
D)  have high values for perfect competition. 
E)  measure how concentrated a firm's sales are among certain types of goods. 
A)  refer to the concentration of customers in a certain area. 
B)  measure whether the market is dominated by a small number of firms. 
C)  measure the concentration of a large number of firms in a certain area. 
D)  have high values for perfect competition. 
E)  measure how concentrated a firm's sales are among certain types of goods.

Question 3

An example of a firm in monopolistic competition is

Accepted Answer

A)  your local water company. 
B)  the sole cable television company. 
C)  the many Chinese restaurants in San Francisco . 
D)  Kansas Power and Light, the sole provider of electricity in Kansas City. 
E)  Shaniq, a wheat farmer. 
A)  your local water company. 
B)  the sole cable television company. 
C)  the many Chinese restaurants in San Francisco . 
D)  Kansas Power and Light, the sole provider of electricity in Kansas City. 
E)  Shaniq, a wheat farmer.

Question 4

Advertising costs

Accepted Answer

A)  make the marginal revenue more elastic. 
B)  shift the ATC curve upward. 
C)  shift the marginal cost curve rightward. 
D)  indirectly shift the marginal cost curve upward. 
E)  affect the marginal cost but not the total cost. 
A)  make the marginal revenue more elastic. 
B)  shift the ATC curve upward. 
C)  shift the marginal cost curve rightward. 
D)  indirectly shift the marginal cost curve upward. 
E)  affect the marginal cost but not the total cost.

Question 5

In the long run,a firm in monopolistic competition

Accepted Answer

A)  makes zero economic profit. 
B)  produces at a minimum average total cost. 
C)  has deficient capacity. 
D)  can make either a normal profit or an economic profit. 
E)  produces a quantity where its demand curve is upward sloping. 
A)  makes zero economic profit. 
B)  produces at a minimum average total cost. 
C)  has deficient capacity. 
D)  can make either a normal profit or an economic profit. 
E)  produces a quantity where its demand curve is upward sloping.

Question 6

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

Accepted Answer

A)  each firm can set the price of its particular product. 
B)  each firm must charge the same price. 
C)  the price is established by collusive behavior. 
D)  each firm must produce the same quantity. 
E)  firms cannot compete with each other on the basis of price. 
A)  each firm can set the price of its particular product. 
B)  each firm must charge the same price. 
C)  the price is established by collusive behavior. 
D)  each firm must produce the same quantity. 
E)  firms cannot compete with each other on the basis of price.

Question 7

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

Accepted Answer

A)  supply and demand. 
B)  efficiency and equity. 
C)  internal and external economies of scale. 
D)  price and the quantity it can sell. 
E)  its marginal revenue and its price. 
A)  supply and demand. 
B)  efficiency and equity. 
C)  internal and external economies of scale. 
D)  price and the quantity it can sell. 
E)  its marginal revenue and its price.

Question 8

Which of the following is correct?

Accepted Answer

A)  Monopoly has a four-firm concentration ratio of 100. 
B)  Perfect competition has a four-firm concentration ratio near zero. 
C)  Monopolistic competition has a four-firm concentration ratio of more than 40. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  Monopoly has a four-firm concentration ratio of 100. 
B)  Perfect competition has a four-firm concentration ratio near zero. 
C)  Monopolistic competition has a four-firm concentration ratio of more than 40. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 9

When firms in monopolistic competition are making an economic profit,firms will

Accepted Answer

A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
E)  enter the industry and then will exit the industry. 
A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
E)  enter the industry and then will exit the industry.

Question 10

Monopolistic competition is a market structure in which

Accepted Answer

A)  firms face barriers to entry. 
B)  a large number of firms compete. 
C)  firms produce and sell an identical product. 
D)  firms face perfectly elastic demand for their product. 
E)  the firms have no ability to influence the price of their product. 
A)  firms face barriers to entry. 
B)  a large number of firms compete. 
C)  firms produce and sell an identical product. 
D)  firms face perfectly elastic demand for their product. 
E)  the firms have no ability to influence the price of their product.

Question 11

A firm is spending the profit-maximizing amount on product development when

Accepted Answer

A)  people perceive the firm's product to be better than those of its competitors. 
B)  the marginal cost of product development is equal to the marginal revenue from product development. 
C)  the price of the good is higher than its marginal cost. 
D)  the advertising costs are covered. 
E)  the firm's total revenue exceeds its total costs. 
A)  people perceive the firm's product to be better than those of its competitors. 
B)  the marginal cost of product development is equal to the marginal revenue from product development. 
C)  the price of the good is higher than its marginal cost. 
D)  the advertising costs are covered. 
E)  the firm's total revenue exceeds its total costs.

Question 12

A firm's efficient scale of production is the output at which its

Accepted Answer

A)  marginal cost is at a minimum. 
B)  average total cost is at a minimum. 
C)  profit is maximized. 
D)  marginal revenue is at a maximum. 
E)  marginal revenue equals marginal cost. 
A)  marginal cost is at a minimum. 
B)  average total cost is at a minimum. 
C)  profit is maximized. 
D)  marginal revenue is at a maximum. 
E)  marginal revenue equals marginal cost.

Question 13

In monopolistic competition,profit is maximized by producing so that marginal revenue

Accepted Answer

A)  equals price. 
B)  is negative. 
C)  equals marginal cost and which are less than price. 
D)  equals average total cost but not marginal cost. 
E)  equals marginal cost and equals price. 
A)  equals price. 
B)  is negative. 
C)  equals marginal cost and which are less than price. 
D)  equals average total cost but not marginal cost. 
E)  equals marginal cost and equals price.

Question 14

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Accepted Answer

A four-firm concentration ratio is the p

Question 15

The square of the percentage market share of each firm summed over the 50 largest firms in a market is the

Accepted Answer

A)  elasticity of demand value. 
B)  elasticity of supply value. 
C)  Herfindahl-Hirschman Index. 
D)  four-firm concentration ratio. 
E)  fifty-firm concentration ratio. 
A)  elasticity of demand value. 
B)  elasticity of supply value. 
C)  Herfindahl-Hirschman Index. 
D)  four-firm concentration ratio. 
E)  fifty-firm concentration ratio.

Question 16

The women's dress industry is monopolistically competitive because each firm has

Accepted Answer

A)  a large market share. 
B)  a very small market share. 
C)  no market share. 
D)  no competition for their market share. 
E)  struck a deal with the many other firms about what price will be charged. 
A)  a large market share. 
B)  a very small market share. 
C)  no market share. 
D)  no competition for their market share. 
E)  struck a deal with the many other firms about what price will be charged.

Question 17

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

Accepted Answer

A)  must be suffering an economic loss. 
B)  must be earning an economic profit. 
C)  has excess capacity. 
D)  is producing at its capacity output. 
E)  must be earning a normal profit. 
A)  must be suffering an economic loss. 
B)  must be earning an economic profit. 
C)  has excess capacity. 
D)  is producing at its capacity output. 
E)  must be earning a normal profit.

Question 18

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

Accepted Answer

A)  sum 
B)  square 
C)  square root 
D)  cube 
E)  negative 
A)  sum 
B)  square 
C)  square root 
D)  cube 
E)  negative

Question 19

Which of the following statements about product development in monopolistic competition is correct?
i.Firms in monopolistic competition undertake too much product development for efficiency.
ii.Firms in monopolistic competition undertake too little product development for efficiency.
iii.Product development might allow the firm to make a temporary economic profit.

Accepted Answer

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

Question 20

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves.
-When the firm in the figure above maximizes its profit,it makes an economic profit of

Accepted Answer

A)  $3,125. 
B)  $6,250. 
C)  $9,375. 
D)  $5,625. 
E)  None of the above answers is correct because the firm incurs an economic loss. 
A)  $3,125. 
B)  $6,250. 
C)  $9,375. 
D)  $5,625. 
E)  None of the above answers is correct because the firm incurs an economic loss.

The marginal revenue curve facing a monopolistically competitive firm

Concentration ratios

An example of a firm in monopolistic competition is

Advertising costs

In the long run,a firm in monopolistic competition

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

Which of the following is correct?

When firms in monopolistic competition are making an economic profit,firms will

Monopolistic competition is a market structure in which

A firm is spending the profit-maximizing amount on product development when

A firm's efficient scale of production is the output at which its

In monopolistic competition,profit is maximized by producing so that marginal revenue

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

The square of the percentage market share of each firm summed over the 50 largest firms in a market is the

The women's dress industry is monopolistically competitive because each firm has

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -When the firm in the figure above maximizes its profit,it makes an economic profit of

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Taxes

Global Markets in Action

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Perfect Competition

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Exam 17: Monopolistic Competition

The marginal revenue curve facing a monopolistically competitive firm

Concentration ratios

An example of a firm in monopolistic competition is

Advertising costs

In the long run,a firm in monopolistic competition

In monopolistic competition,the presence of a large number of firms making a differentiated product means that

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

Which of the following is correct?

When firms in monopolistic competition are making an economic profit,firms will

Monopolistic competition is a market structure in which

A firm is spending the profit-maximizing amount on product development when

A firm's efficient scale of production is the output at which its

In monopolistic competition,profit is maximized by producing so that marginal revenue

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

The square of the percentage market share of each firm summed over the 50 largest firms in a market is the

The women's dress industry is monopolistically competitive because each firm has

If a firm is maximizing its profit and producing less than the output at which its average total cost is minimized,then that firm

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -When the firm in the figure above maximizes its profit,it makes an economic profit of

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