Question 1

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Accepted Answer

A)  100 percent 
B)  75 percent 
C)  25 percent 
D)  0 percent 
E)  91 percent 
A)  100 percent 
B)  75 percent 
C)  25 percent 
D)  0 percent 
E)  91 percent

Question 2

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

Accepted Answer

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

Question 3

-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 4

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 5

-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.Kevin will train how many clients per day?

Accepted Answer

A)  4 
B)  6 
C)  10 
D)  between 2 and 4 
E)  None of the above answers is correct. 
A)  4 
B)  6 
C)  10 
D)  between 2 and 4 
E)  None of the above answers is correct.

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

The U.S.Justice Department

Accepted Answer

A)  scrutinizes any merger of firms in a market in which the four-firm concentration exceeds 25 percent. 
B)  uses only the Herfindahl-Hirschman Index when considering whether to challenge a merger. 
C)  is likely to challenge a merger if the Herfindahl-Hirschman Index exceeds 1800. 
D)  Answers A and B are correct. 
E)  Answers B and C are correct. 
A)  scrutinizes any merger of firms in a market in which the four-firm concentration exceeds 25 percent. 
B)  uses only the Herfindahl-Hirschman Index when considering whether to challenge a merger. 
C)  is likely to challenge a merger if the Herfindahl-Hirschman Index exceeds 1800. 
D)  Answers A and B are correct. 
E)  Answers B and C are correct.

Question 8

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 9

Advertising costs and other selling costs are

Accepted Answer

A)  efficient. 
B)  fixed costs. 
C)  variable costs. 
D)  marginal costs. 
E)  considered as part of demand because they affect the demand for the good. 
A)  efficient. 
B)  fixed costs. 
C)  variable costs. 
D)  marginal costs. 
E)  considered as part of demand because they affect the demand for the good.

Question 10

In monopolistic competition there

Accepted Answer

A)  are many firms and many buyers. 
B)  are several large firms. 
C)  is one large firm. 
D)  might be many, several, or one firm. 
E)  are many firms but only a few buyers. 
A)  are many firms and many buyers. 
B)  are several large firms. 
C)  is one large firm. 
D)  might be many, several, or one firm. 
E)  are many firms but only a few buyers.

Question 11

The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI)for this industry is ________.

Accepted Answer

A)  2,551 
B)  5,184 
C)  24,061 
D)  10,000 
E)  3,013 
A)  2,551 
B)  5,184 
C)  24,061 
D)  10,000 
E)  3,013

Question 12

Monopolistic competition is efficient when compared to

Accepted Answer

A)  to perfect competition. 
B)  complete product uniformity. 
C)  the short run. 
D)  the long run. 
E)  None of the above answers is correct. 
A)  to perfect competition. 
B)  complete product uniformity. 
C)  the short run. 
D)  the long run. 
E)  None of the above answers is correct.

Question 13

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Accepted Answer

A)  fixed cost 
B)  average total cost 
C)  average variable cost 
D)  average fixed cost 
E)  marginal cost 
A)  fixed cost 
B)  average total cost 
C)  average variable cost 
D)  average fixed cost 
E)  marginal cost

Question 14

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 15

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 16

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 17

In monopolistic competition,there are ________ barriers to entry and so firms in monopolistic competition ________ make an economic profit in the long run.

Accepted Answer

A)  high; can 
B)  high; cannot 
C)  no; can 
D)  no; cannot 
E)  sometimes; can sometimes 
A)  high; can 
B)  high; cannot 
C)  no; can 
D)  no; cannot 
E)  sometimes; can sometimes

Question 18

When firms in monopolistic competition incur an economic loss,some firms will

Accepted Answer

A)  enter the industry and produce more products. 
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 become more elastic for the original firms. 
E)  exit the industry and other firms will enter. 
A)  enter the industry and produce more products. 
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 become more elastic for the original firms. 
E)  exit the industry and other firms will enter.

Question 19

In monopolistic competition in the long run,firms ________.

Accepted Answer

A)  make zero economic profit and require more capacity 
B)  incur an economic loss and require more capacity 
C)  make an economic profit and have excess capacity 
D)  make zero economic profit and have excess capacity 
E)  make an economic profit and require more capacity 
A)  make zero economic profit and require more capacity 
B)  incur an economic loss and require more capacity 
C)  make an economic profit and have excess capacity 
D)  make zero economic profit and have excess capacity 
E)  make an economic profit and require more capacity

Question 20

The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-The darkened area in the figure above is the

Accepted Answer

A)  deadweight loss. 
B)  firm's economic loss. 
C)  consumer surplus. 
D)  firm's total cost. 
E)  firm's total revenue. 
A)  deadweight loss. 
B)  firm's economic loss. 
C)  consumer surplus. 
D)  firm's total cost. 
E)  firm's total revenue.

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

-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.

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

-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.Kevin will train how many clients per day?

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

The U.S.Justice Department

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

Advertising costs and other selling costs are

In monopolistic competition there

The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI)for this industry is ________.

Monopolistic competition is efficient when compared to

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Advertising costs

A firm in monopolistic competition is

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

In monopolistic competition,there are barriers to entry and so firms in monopolistic competition make an economic profit in the long run.

When firms in monopolistic competition incur an economic loss,some firms will

In monopolistic competition in the long run,firms ________.

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -The darkened area in the figure above is the

Getting Started

The Usand 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

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

-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.

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

-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.Kevin will train how many clients per day?

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

The U.S.Justice Department

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

Advertising costs and other selling costs are

In monopolistic competition there

The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI)for this industry is ________.

Monopolistic competition is efficient when compared to

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Advertising costs

A firm in monopolistic competition is

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

In monopolistic competition,there are ________ barriers to entry and so firms in monopolistic competition ________ make an economic profit in the long run.

When firms in monopolistic competition incur an economic loss,some firms will

In monopolistic competition in the long run,firms ________.

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -The darkened area in the figure above is the

Getting Started

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

In monopolistic competition,there are barriers to entry and so firms in monopolistic competition make an economic profit in the long run.