Question 1

-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 2

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase 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)  average total cost is less than $3.56. 
E)  Both answers A 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)  average total cost is less than $3.56. 
E)  Both answers A and D are correct.

Question 3

What is the Herfindahl-Hirschman Index and what does it measure?

Accepted Answer

The Herfindahl-Hirschman Index,or HHI,is

Question 4

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 5

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.

Question 6

What does monopolistic competition have in common with perfect competition?

Accepted Answer

A)  a large number of firms and freedom of entry and exit 
B)  a standardized product 
C)  product differentiation 
D)  the ability to make an economic profit in the long run 
E)  barriers to exit but no barriers to entry 
A)  a large number of firms and freedom of entry and exit 
B)  a standardized product 
C)  product differentiation 
D)  the ability to make an economic profit in the long run 
E)  barriers to exit but no barriers to entry

Question 7

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Accepted Answer

A)  Nothing, the marginal revenue curve is unchanged. 
B)  It disappears. 
C)  It shifts rightward. 
D)  It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic. 
A)  Nothing, the marginal revenue curve is unchanged. 
B)  It disappears. 
C)  It shifts rightward. 
D)  It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic.

Question 8

Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

Accepted Answer

@#IMG-DLM& The compl

Question 9

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 10

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

Accepted Answer

A)  2 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  50 percent 
A)  2 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  50 percent

Question 11

-The above figure represents a restaurant operating in monopolistic competition.
a.What is the profit-maximizing level of output?
b.What price will the firm charge?
c.What is the firm's profit (or loss)?
d.Is this a long-run equilibrium? Why or why not?
e.Is this firm producing its efficient scale of output?

Accepted Answer

a.The quantity is 20 meals a day.
b.The

Question 12

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

Accepted Answer

A)  3,600. 
B)  100. 
C)  625. 
D)  25. 
E)  2,500. 
A)  3,600. 
B)  100. 
C)  625. 
D)  25. 
E)  2,500.

Question 13

The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-As long as the firm illustrated above remains open,it will set a price of ________ per month and it will ________.

Accepted Answer

A)  $50; make an economic profit 
B)  $50; incur an economic loss 
C)  $40; make an economic profit 
D)  $40; incur an economic loss 
E)  less than $20; incur an economic loss 
A)  $50; make an economic profit 
B)  $50; incur an economic loss 
C)  $40; make an economic profit 
D)  $40; incur an economic loss 
E)  less than $20; incur an economic loss

Question 14

Why is collusion about the price and amount of output impossible in monopolistic competition?

Accepted Answer

The smaller the number of firm

Question 15

In a market in which firms operate in monopolistic competition,

Accepted Answer

A)  the HHI for a single firm exceeds 2500. 
B)  firms compete on price, quality and marketing. 
C)  in the long run firms produce at their efficient scale. 
D)  in the long run firms are not able to charge a markup. 
E)  advertising is nonexistent. 
A)  the HHI for a single firm exceeds 2500. 
B)  firms compete on price, quality and marketing. 
C)  in the long run firms produce at their efficient scale. 
D)  in the long run firms are not able to charge a markup. 
E)  advertising is nonexistent.

Question 16

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

Accepted Answer

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

Question 17

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

Accepted Answer

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

Question 18

Which of the following is the best example of a differentiated product?

Accepted Answer

A)  beets in the local supermarket 
B)  diamonds 
C)  airlines 
D)  running shoes 
E)  electricity 
A)  beets in the local supermarket 
B)  diamonds 
C)  airlines 
D)  running shoes 
E)  electricity

Question 19

A firm in monopolistic competition

Accepted Answer

A)  has no control over the price of the product it is selling. 
B)  might be selling a brand name product. 
C)  does not advertise nor market its product. 
D)  Both answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  has no control over the price of the product it is selling. 
B)  might be selling a brand name product. 
C)  does not advertise nor market its product. 
D)  Both answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 20

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.

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

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

What is the Herfindahl-Hirschman Index and what does it measure?

In monopolistic competition,the entry of new firms

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

What does monopolistic competition have in common with perfect competition?

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

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

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of per month and it will .

Why is collusion about the price and amount of output impossible in monopolistic competition?

In a market in which firms operate in monopolistic competition,

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

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

Which of the following is the best example of a differentiated product?

A firm in monopolistic competition

In the long run,a firm in monopolistic competition

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

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

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

What is the Herfindahl-Hirschman Index and what does it measure?

In monopolistic competition,the entry of new firms

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

What does monopolistic competition have in common with perfect competition?

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

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

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of ________ per month and it will ________.

Why is collusion about the price and amount of output impossible in monopolistic competition?

In a market in which firms operate in monopolistic competition,

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

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

Which of the following is the best example of a differentiated product?

A firm in monopolistic competition

In the long run,a firm in monopolistic competition

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

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of per month and it will .