Question 1

-The firm in the above figure has an economic profit of ________.

Accepted Answer

A)  $0 
B)  $80 
C)  $160 
D)  more than $161 
E)  less than zero, that is, the firm has an economic loss 
A)  $0 
B)  $80 
C)  $160 
D)  more than $161 
E)  less than zero, that is, the firm has an economic loss

Question 2

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 3

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 4

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

Accepted Answer

The additional selling costs from produc

Question 5

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

Accepted Answer

A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20 
A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20

Question 6

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 7

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes ________ temporarily and economic profit ________.

Accepted Answer

A)  more elastic; decreases 
B)  less elastic; increases 
C)  more elastic; increases 
D)  less elastic; decreases 
E)  unit elastic; increases 
A)  more elastic; decreases 
B)  less elastic; increases 
C)  more elastic; increases 
D)  less elastic; decreases 
E)  unit elastic; increases

Question 8

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct.In mo

Question 9

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.A firm in mon

Question 10

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

Accepted Answer

A)  $20 
B)  $30 
C)  $40 
D)  $50 
E)  $10 
A)  $20 
B)  $30 
C)  $40 
D)  $50 
E)  $10

Question 11

Excess capacity exists when a firm produces

Accepted Answer

A)  more than the profit-maximizing level of output. 
B)  less than the quantity that minimizes average total cost. 
C)  less than the quantity that minimizes marginal cost. 
D)  more than the quantity that minimizes marginal cost. 
E)  None of the above answers is correct. 
A)  more than the profit-maximizing level of output. 
B)  less than the quantity that minimizes average total cost. 
C)  less than the quantity that minimizes marginal cost. 
D)  more than the quantity that minimizes marginal cost. 
E)  None of the above answers is correct.

Question 12

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 are 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 are correct because the firm incurs an economic loss.

Question 13

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Accepted Answer

The efficient scale of output is the lev

Question 14

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 15

Because of the number of firms in monopolistic competition

Accepted Answer

A)  each firm has a large market share. 
B)  it is possible for the firms to collude. 
C)  no one firm can dominate the market. 
D)  one firm has the ability to dictate market conditions. 
E)  each firm must carefully monitor what its competitors do. 
A)  each firm has a large market share. 
B)  it is possible for the firms to collude. 
C)  no one firm can dominate the market. 
D)  one firm has the ability to dictate market conditions. 
E)  each firm must carefully monitor what its competitors do.

Question 16

Firms in monopolistic competition determine the profit-maximizing level of output by producing

Accepted Answer

A)  the same output level as rivals do. 
B)  where average total cost is minimized. 
C)  at the point of minimum average fixed cost. 
D)  where marginal revenue equals marginal cost. 
E)  where price equals average total cost. 
A)  the same output level as rivals do. 
B)  where average total cost is minimized. 
C)  at the point of minimum average fixed cost. 
D)  where marginal revenue equals marginal cost. 
E)  where price equals average total cost.

Question 17

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

Accepted Answer

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

Question 18

The freedom of entry and exit in monopolistic competition means that firms

Accepted Answer

A)  enter the market when economic losses are being incurred. 
B)  exit the market when economic profits are being made. 
C)  enter the market when firms are making zero economic profit. 
D)  can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E)  find it easy to permanently make an economic profit. 
A)  enter the market when economic losses are being incurred. 
B)  exit the market when economic profits are being made. 
C)  enter the market when firms are making zero economic profit. 
D)  can enter a market to compete for economic profits and leave when economic losses are being incurred. 
E)  find it easy to permanently make an economic profit.

Question 19

How do the characteristics of perfect competition and monopolistic competition differ?

Accepted Answer

In monopolistic competition,the products

Question 20

A firm in monopolistic competition has ________ demand curve.

Accepted Answer

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

-The firm in the above figure has an economic profit of ________.

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

Monopolistic competition is a market structure in which

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

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

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes temporarily and economic profit .

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

Excess capacity exists when a firm produces

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

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

How do product development and marketing affect a firm in monopolistic competition?

Because of the number of firms in monopolistic competition

Firms in monopolistic competition determine the profit-maximizing level of output by producing

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

The freedom of entry and exit in monopolistic competition means that firms

How do the characteristics of perfect competition and monopolistic competition differ?

A firm in monopolistic competition has ________ demand curve.

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 firm in the above figure has an economic profit of ________.

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

Monopolistic competition is a market structure in which

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

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

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes ________ temporarily and economic profit ________.

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

Excess capacity exists when a firm produces

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

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

How do product development and marketing affect a firm in monopolistic competition?

Because of the number of firms in monopolistic competition

Firms in monopolistic competition determine the profit-maximizing level of output by producing

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

The freedom of entry and exit in monopolistic competition means that firms

How do the characteristics of perfect competition and monopolistic competition differ?

A firm in monopolistic competition has ________ demand curve.

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 shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes temporarily and economic profit .

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