Question 1

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

Accepted Answer

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

Question 2

Firms in monopolistic competition have demand curves that are

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  downward sloping. 
D)  upward sloping. 
E)  U-shaped. 
A)  horizontal. 
B)  vertical. 
C)  downward sloping. 
D)  upward sloping. 
E)  U-shaped.

Question 3

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 4

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 5

A monopolistically competitive firm is inefficient because the firm

Accepted Answer

A)  makes positive economic profit in the long run. 
B)  is producing at an output where marginal cost equals price. 
C)  is not maximizing its profits. 
D)  produces a product identical to that of its competitors. 
E)  produces at an output level where average total cost is not at its minimum. 
A)  makes positive economic profit in the long run. 
B)  is producing at an output where marginal cost equals price. 
C)  is not maximizing its profits. 
D)  produces a product identical to that of its competitors. 
E)  produces at an output level where average total cost is not at its minimum.

Question 6

If a firm in monopolistic competition is making an economic profit,

Accepted Answer

A)  it is in the long run. 
B)  other firms can enter the market. 
C)  it can do so because it is "monopolistic" and other firms will have a hard time competing with it. 
D)  its average cost must exceed its marginal cost. 
E)  The question errs because firms in monopolistic competition cannot make an economic profit. 
A)  it is in the long run. 
B)  other firms can enter the market. 
C)  it can do so because it is "monopolistic" and other firms will have a hard time competing with it. 
D)  its average cost must exceed its marginal cost. 
E)  The question errs because firms in monopolistic competition cannot make an economic profit.

Question 7

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 8

To maintain their economic profits,firms in monopolistic competition must continually engage in

Accepted Answer

A)  product development and marketing. 
B)  lowering their product's price. 
C)  raising their product's price. 
D)  realizing short-run losses. 
E)  making the demand for their product more elastic. 
A)  product development and marketing. 
B)  lowering their product's price. 
C)  raising their product's price. 
D)  realizing short-run losses. 
E)  making the demand for their product more elastic.

Question 9

The decision to innovate

Accepted Answer

A)  depends on the marketing department's needs. 
B)  depends on whether the firm wants to benefit its customers. 
C)  is based on the marginal cost and the marginal revenue of innovation. 
D)  is unnecessary in a monopolistically competitive market. 
E)  None of the above answers is correct. 
A)  depends on the marketing department's needs. 
B)  depends on whether the firm wants to benefit its customers. 
C)  is based on the marginal cost and the marginal revenue of innovation. 
D)  is unnecessary in a monopolistically competitive market. 
E)  None of the above answers is correct.

Question 10

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is ________.

Accepted Answer

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

Question 11

When the Herfindahl-Hirschman Index for an industry is

Accepted Answer

A)  very small, the industry can be perfectly competitive. 
B)  very large, the industry can be perfectly competitive. 
C)  10,000, the industry is perfectly competitive. 
D)  very small, the industry can be a monopoly. 
E)  above 5,000 the industry is considered not very competitive and when it is below 5,000 the industry is considered very competitive. 
A)  very small, the industry can be perfectly competitive. 
B)  very large, the industry can be perfectly competitive. 
C)  10,000, the industry is perfectly competitive. 
D)  very small, the industry can be a monopoly. 
E)  above 5,000 the industry is considered not very competitive and when it is below 5,000 the industry is considered very competitive.

Question 12

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 13

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

Accepted Answer

A)  100. 
B)  4150. 
C)  25. 
D)  3450. 
E)  undefined because there are not 50 firms in the industry. 
A)  100. 
B)  4150. 
C)  25. 
D)  3450. 
E)  undefined because there are not 50 firms in the industry.

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

Firms in monopolistic competition have demand curves that are

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

If firms in monopolistic competition are making economic profits,then

A monopolistically competitive firm is inefficient because the firm

If a firm in monopolistic competition is making an economic profit,

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

To maintain their economic profits,firms in monopolistic competition must continually engage in

The decision to innovate

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is ________.

When the Herfindahl-Hirschman Index for an industry is

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

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

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

If the four-firm concentration ratio for the market for diapers is 73 percent,then this industry is best characterized as

Firms in monopolistic competition have demand curves that are

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

If firms in monopolistic competition are making economic profits,then

A monopolistically competitive firm is inefficient because the firm

If a firm in monopolistic competition is making an economic profit,

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

To maintain their economic profits,firms in monopolistic competition must continually engage in

The decision to innovate

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is ________.

When the Herfindahl-Hirschman Index for an industry is

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

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

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