Question 1

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Accepted Answer

A)  demand curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  average total cost curve. 
E)  average variable cost curve. 
A)  demand curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  average total cost curve. 
E)  average variable cost curve.

Question 2

Which market structure is characterized by the following characteristics?
i.a large number of firms compete
ii.each firm produces a differentiated product
iii.firms are free to enter and exit

Accepted Answer

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

Question 3

If a monopolistically competitive seller's marginal cost is $3.56,the firm will decrease its output if

Accepted Answer

A)  its marginal revenue is less than $3.56. 
B)  its marginal revenue is equal to $3.56. 
C)  its marginal revenue is more than $3.56. 
D)  its average total cost is equal to $4.00. 
E)  Both answers B and D are correct. 
A)  its marginal revenue is less than $3.56. 
B)  its marginal revenue is equal to $3.56. 
C)  its marginal revenue is more than $3.56. 
D)  its average total cost is equal to $4.00. 
E)  Both answers B and D are correct.

Question 4

$$\begin{array} { c c } 
\text { Firm } & \begin{array} { c } 
\text { Market share } \
\text { (percent) }
\end{array} \
\hline 1 & 20 \
2 & 20 \
3 & 15 \
4 & 10 \
5 & 10 \
6 & 8 \
7 & 7 \
8 & 5 \
9 & 5 \
\hline
\end{array}$$
-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

Accepted Answer

The HHI equals 20² + 20² + 15²

Question 5

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

Accepted Answer

The efficient scale is the quantity prod

Question 6

One problem with measures of market concentrations is that they do not

Accepted Answer

A)  account for barriers to entry. 
B)  allow for all market types. 
C)  account for the difficulty in collecting total revenue data. 
D)  create meaningful comparisons across industries. 
E)  accurately measure concentration in markets with fewer than 4 firms. 
A)  account for barriers to entry. 
B)  allow for all market types. 
C)  account for the difficulty in collecting total revenue data. 
D)  create meaningful comparisons across industries. 
E)  accurately measure concentration in markets with fewer than 4 firms.

Question 7

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion ________ consumers because it ________.

Accepted Answer

A)  helps; lowers marginal cost 
B)  harms; definitely increases average total cost 
C)  helps; provides a signal and information about the sunglasses 
D)  harms; increases the elasticity of demand 
E)  helps; is a fixed cost and not a variable cost 
A)  helps; lowers marginal cost 
B)  harms; definitely increases average total cost 
C)  helps; provides a signal and information about the sunglasses 
D)  harms; increases the elasticity of demand 
E)  helps; is a fixed cost and not a variable cost

Question 8

A firm in monopolistic competition is

Accepted Answer

A)  efficient because in the long run it makes zero economic profit. 
B)  efficient because it produces at the minimum average total cost. 
C)  inefficient because price exceeds marginal cost. 
D)  efficient because of the ease of entry. 
E)  efficient because it produces where MR = MC. 
A)  efficient because in the long run it makes zero economic profit. 
B)  efficient because it produces at the minimum average total cost. 
C)  inefficient because price exceeds marginal cost. 
D)  efficient because of the ease of entry. 
E)  efficient because it produces where MR = MC.

Question 9

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

Accepted Answer

In the long run,a firm in monopolistic c

Question 10

Firms in monopolistic competition compete on
i.quality.
ii.price.
iii.marketing.

Accepted Answer

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

Question 11

Which of the following is the best example of a monopolistically competitive industry?

Accepted Answer

A)  land-based long distance telephone service 
B)  wheat farming 
C)  the local electricity producer 
D)  manufacturing of shirts 
E)  cable television 
A)  land-based long distance telephone service 
B)  wheat farming 
C)  the local electricity producer 
D)  manufacturing of shirts 
E)  cable television

Question 12

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Industry A } \
\text { (total revenue, millions of dollars) }
\end{array} & \begin{array} { c } 
\text { Industry B } \
\text { (total revenue, millions of dollars) }
\end{array} \
\hline 5 & 10 \
7 & 8 \
4 & 9 \
16 & 8 \
11 & 9 \
10 & 10 \
8 & 9 \
19 & 9 \
13 & 10 \
4 & 9 \
3 & 9 \
\hline
\end{array}$$
-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

Accepted Answer

Industry A has a four-firm concentration

Question 13

Which of the following characterize a firm in monopolistic competition in the long run?
i.operating at the minimum efficient scale
ii.markups of price over marginal cost
iii.zero economic profit

Accepted Answer

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

Question 14

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ per meal.

Accepted Answer

A)  $20 
B)  $30 
C)  $50 
D)  less than $20 
E)  more than $50 
A)  $20 
B)  $30 
C)  $50 
D)  less than $20 
E)  more than $50

Question 15

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

Accepted Answer

A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  can; only in the short run can 
A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  can; only in the short run can

Question 16

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Accepted Answer

A)  less than 150 
B)  between 151 and 250 
C)  between 251 and 350 
D)  between 451 and 450 
E)  more than 451 
A)  less than 150 
B)  between 151 and 250 
C)  between 251 and 350 
D)  between 451 and 450 
E)  more than 451

Question 17

Which of the following is TRUE about a firm in monopolistic competition in the long run?

Accepted Answer

A)  P = MC 
B)  P = MR 
C)  ATC = MC 
D)  P = ATC 
E)  MC = ATC 
A)  P = MC 
B)  P = MR 
C)  ATC = MC 
D)  P = ATC 
E)  MC = ATC

Question 18

A firm in monopolistic competition has a ________ market share and ________ influence the price of its good or service.

Accepted Answer

A)  large; can 
B)  large; cannot 
C)  small; can 
D)  small; cannot 
E)  large; might be able to 
A)  large; can 
B)  large; cannot 
C)  small; can 
D)  small; cannot 
E)  large; might be able to

Question 19

Product differentiation means

Accepted Answer

A)  firms sell products that are very dissimilar. 
B)  products sold by different firms are slightly different. 
C)  charging a higher price to consumers with high willingness to pay. 
D)  charging a lower price to consumers with low willingness to pay. 
E)  that a single firm sells many different types of products. 
A)  firms sell products that are very dissimilar. 
B)  products sold by different firms are slightly different. 
C)  charging a higher price to consumers with high willingness to pay. 
D)  charging a lower price to consumers with low willingness to pay. 
E)  that a single firm sells many different types of products.

Question 20

Entry and exit continue in monopolistic competition until the remaining firms are

Accepted Answer

A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making less than a normal profit. 
D)  making zero economic profit. 
E)  producing the normal amount of product differentiation. 
A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making less than a normal profit. 
D)  making zero economic profit. 
E)  producing the normal amount of product differentiation.

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Which market structure is characterized by the following characteristics? i.a large number of firms compete ii.each firm produces a differentiated product iii.firms are free to enter and exit

If a monopolistically competitive seller's marginal cost is $3.56,the firm will decrease its output if

Firm Market share (percent) 1 20 2 20 3 15 4 10 5 10 6 8 7 7 8 5 9 5 -There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

One problem with measures of market concentrations is that they do not

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion consumers because it .

A firm in monopolistic competition is

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

Firms in monopolistic competition compete on i.quality. ii.price. iii.marketing.

Which of the following is the best example of a monopolistically competitive industry?

Which of the following characterize a firm in monopolistic competition in the long run? i.operating at the minimum efficient scale ii.markups of price over marginal cost iii.zero economic profit

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ per meal.

A firm in monopolistic competition influence its price and influence the market average price.

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Which of the following is TRUE about a firm in monopolistic competition in the long run?

A firm in monopolistic competition has a market share and influence the price of its good or service.

Product differentiation means

Entry and exit continue in monopolistic competition until the remaining firms are

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

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Which market structure is characterized by the following characteristics? i.a large number of firms compete ii.each firm produces a differentiated product iii.firms are free to enter and exit

If a monopolistically competitive seller's marginal cost is $3.56,the firm will decrease its output if

Firm Market share (percent) 1 20 2 20 3 15 4 10 5 10 6 8 7 7 8 5 9 5 -There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

One problem with measures of market concentrations is that they do not

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion ________ consumers because it ________.

A firm in monopolistic competition is

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

Firms in monopolistic competition compete on i.quality. ii.price. iii.marketing.

Which of the following is the best example of a monopolistically competitive industry?

Which of the following characterize a firm in monopolistic competition in the long run? i.operating at the minimum efficient scale ii.markups of price over marginal cost iii.zero economic profit

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium price at this restaurant is ________ per meal.

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Which of the following is TRUE about a firm in monopolistic competition in the long run?

A firm in monopolistic competition has a ________ market share and ________ influence the price of its good or service.

Product differentiation means

Entry and exit continue in monopolistic competition until the remaining firms are

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

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion consumers because it .

A firm in monopolistic competition influence its price and influence the market average price.

A firm in monopolistic competition has a market share and influence the price of its good or service.