Question 1

List four characteristics of monopolistic competition.

Accepted Answer

There are a large number firms; each pro

Question 2

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 3

A firm in monopolistic competition makes its decisions on quantity and price by

Accepted Answer

A)  taking price as given from the market and producing where MR = MC. 
B)  taking both price and quantity as given from the market. 
C)  producing where MR = MC and setting the price for this quantity from the demand curve. 
D)  taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E)  producing where MR = MC and setting the price so that P = MR = MC. 
A)  taking price as given from the market and producing where MR = MC. 
B)  taking both price and quantity as given from the market. 
C)  producing where MR = MC and setting the price for this quantity from the demand curve. 
D)  taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E)  producing where MR = MC and setting the price so that P = MR = MC.

Question 4

Why does a firm in monopolistic competition make zero economic profit rather than an economic profit in the long run?

Accepted Answer

Entry into monopolistically competitive

Question 5

Product differentiation allows a firm to compete with another firm on the basis of

Accepted Answer

A)  efficiency. 
B)  elasticity. 
C)  quality, price, and marketing. 
D)  the level of output and the price. 
E)  demand. 
A)  efficiency. 
B)  elasticity. 
C)  quality, price, and marketing. 
D)  the level of output and the price. 
E)  demand.

Question 6

In the long-run,a firm in monopolistic competition produces at an output level where

Accepted Answer

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

Question 7

-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 8

Which of the following is NOT a characteristic of long-run equilibrium in monopolistic competition?

Accepted Answer

A)  the firm makes zero economic profit 
B)  price equal to average total cost 
C)  production occurs at minimum average total cost 
D)  marginal revenue is equal to marginal cost 
E)  price exceeds marginal revenue 
A)  the firm makes zero economic profit 
B)  price equal to average total cost 
C)  production occurs at minimum average total cost 
D)  marginal revenue is equal to marginal cost 
E)  price exceeds marginal revenue

Question 9

Firms attempt to create a consumer perception of product differentiation through
i.packaging.
ii.marketing.
iii.advertising.

Accepted Answer

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

Question 10

Why are selling costs high in monopolistic competition?

Accepted Answer

In monopolistic competition,there are a

Question 11

In the long run,a firm in monopolistic competition ________ excess capacity and a firm in perfect competition ________ excess capacity.

Accepted Answer

A)  has; has 
B)  has; does not have 
C)  does not have; has 
D)  does not have; does not have 
E)  might have; might have 
A)  has; has 
B)  has; does not have 
C)  does not have; has 
D)  does not have; does not have 
E)  might have; might have

Question 12

-The firm in the above figure has excess capacity of ________ meals per day.

Accepted Answer

A)  0 
B)  between 1 and 10 
C)  between 11 and 20 
D)  more than 21 and 30 
E)  more than 31 
A)  0 
B)  between 1 and 10 
C)  between 11 and 20 
D)  more than 21 and 30 
E)  more than 31

Question 13

In both monopolistic competition and perfect competition,

Accepted Answer

A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same. 
A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same.

Question 14

When firms in monopolistic competition are making an economic profit,firms will

Accepted Answer

A)  enter the industry, and demand will increase for the original firms. 
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 decrease for the original firms. 
E)  enter the industry and then will exit the industry. 
A)  enter the industry, and demand will increase for the original firms. 
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 decrease for the original firms. 
E)  enter the industry and then will exit the industry.

Question 15

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

Accepted Answer

A)  competitive. 
B)  not competitive. 
C)  moderately competitive. 
D)  purely competitive. 
E)  either a monopoly or monopolistic competition. 
A)  competitive. 
B)  not competitive. 
C)  moderately competitive. 
D)  purely competitive. 
E)  either a monopoly or monopolistic competition.

Question 16

Firms in monopolistic competition

Accepted Answer

A)  face a downward-sloping demand curve. 
B)  cannot charge a markup because there are no dominant firms. 
C)  definitely do not benefit from advertising. 
D)  produce at the efficient scale in the long run. 
E)  generally have low to nonexistent selling costs. 
A)  face a downward-sloping demand curve. 
B)  cannot charge a markup because there are no dominant firms. 
C)  definitely do not benefit from advertising. 
D)  produce at the efficient scale in the long run. 
E)  generally have low to nonexistent selling costs.

Question 17

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

Accepted Answer

A)  0.25 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  11 percent 
A)  0.25 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  11 percent

Question 18

The figure above illustrates 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 profit. 
C)  consumer surplus. 
D)  firm's total cost. 
E)  firm's total revenue. 
A)  deadweight loss. 
B)  firm's economic profit. 
C)  consumer surplus. 
D)  firm's total cost. 
E)  firm's total revenue.

Question 19

In the long run,firms in monopolistic competition make zero economic profit because

Accepted Answer

A)  firms are free to enter and exit. 
B)  their products are similar but slightly different. 
C)  of over-reliance on product marketing. 
D)  of collusion among the various sellers. 
E)  their demand curves are horizontal. 
A)  firms are free to enter and exit. 
B)  their products are similar but slightly different. 
C)  of over-reliance on product marketing. 
D)  of collusion among the various sellers. 
E)  their demand curves are horizontal.

Question 20

One characteristic of monopolistic competition is that it has

Accepted Answer

A)  many firms producing a slightly differentiated product. 
B)  many firms producing identical goods. 
C)  one firm producing a unique good. 
D)  a few firms producing a slightly differentiated product. 
E)  large barriers to entry. 
A)  many firms producing a slightly differentiated product. 
B)  many firms producing identical goods. 
C)  one firm producing a unique good. 
D)  a few firms producing a slightly differentiated product. 
E)  large barriers to entry.

List four characteristics of monopolistic competition.

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

A firm in monopolistic competition makes its decisions on quantity and price by

Why does a firm in monopolistic competition make zero economic profit rather than an economic profit in the long run?

Product differentiation allows a firm to compete with another firm on the basis of

In the long-run,a firm in monopolistic competition produces at an output level where

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

Which of the following is NOT a characteristic of long-run equilibrium in monopolistic competition?

Firms attempt to create a consumer perception of product differentiation through i.packaging. ii.marketing. iii.advertising.

Why are selling costs high in monopolistic competition?

In the long run,a firm in monopolistic competition excess capacity and a firm in perfect competition excess capacity.

-The firm in the above figure has excess capacity of ________ meals per day.

In both monopolistic competition and perfect competition,

When firms in monopolistic competition are making an economic profit,firms will

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

Firms in monopolistic competition

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

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

In the long run,firms in monopolistic competition make zero economic profit because

One characteristic of monopolistic competition is that it has

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

List four characteristics of monopolistic competition.

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

A firm in monopolistic competition makes its decisions on quantity and price by

Why does a firm in monopolistic competition make zero economic profit rather than an economic profit in the long run?

Product differentiation allows a firm to compete with another firm on the basis of

In the long-run,a firm in monopolistic competition produces at an output level where

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

Which of the following is NOT a characteristic of long-run equilibrium in monopolistic competition?

Firms attempt to create a consumer perception of product differentiation through i.packaging. ii.marketing. iii.advertising.

Why are selling costs high in monopolistic competition?

In the long run,a firm in monopolistic competition ________ excess capacity and a firm in perfect competition ________ excess capacity.

-The firm in the above figure has excess capacity of ________ meals per day.

In both monopolistic competition and perfect competition,

When firms in monopolistic competition are making an economic profit,firms will

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

Firms in monopolistic competition

Which of the following four-firm concentration ratios would be the best indicator of an oligopoly?

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

In the long run,firms in monopolistic competition make zero economic profit because

One characteristic of monopolistic competition is that it has

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 has a market share and influence the price of its good or service.

In the long run,a firm in monopolistic competition excess capacity and a firm in perfect competition excess capacity.