Question 1

Each firm in a monopolistically competitive firm faces a downward-sloping demand curve because

Accepted Answer

A) there are many other sellers in the market. 
B) there are very few other sellers in the market. 
C) the firm's product is different from those offered by other firms in the market. 
D) that firm faces the threat of entry into the market by new firms. 
A) there are many other sellers in the market. 
B) there are very few other sellers in the market. 
C) the firm's product is different from those offered by other firms in the market. 
D) that firm faces the threat of entry into the market by new firms.

Question 2

When consumers are exposed to additional choices that result from the introduction of a new product,

Accepted Answer

A) their satisfaction is likely to be lowered as a result of their having to make additional choices. 
B) a product-variety externality is said to occur. 
C) an advertising externality is said to occur. 
D) consumers are likely to experience negative consumption externalities. 
A) their satisfaction is likely to be lowered as a result of their having to make additional choices. 
B) a product-variety externality is said to occur. 
C) an advertising externality is said to occur. 
D) consumers are likely to experience negative consumption externalities.

Question 3

Both monopolistic competition and oligopoly are market structures

Accepted Answer

A) that fail to achieve the total surplus achieved by perfect competition. 
B) that feature only a few firms in each market. 
C) to which the concept of Nash equilibrium is frequently applied by economists. 
D) in which firms earn zero economic profit in the long run. 
A) that fail to achieve the total surplus achieved by perfect competition. 
B) that feature only a few firms in each market. 
C) to which the concept of Nash equilibrium is frequently applied by economists. 
D) in which firms earn zero economic profit in the long run.

Question 4

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Accepted Answer

A) True 
 B)False

Question 5

Under which of the following market structures would consumers likely receive the most product variety?

Accepted Answer

A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly 
A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) Monopoly

Question 6

A monopolistically competitive firm faces the following demand curve for its product:  
The firm has total fixed costs of $20 and a constant marginal cost of $5 per unit.The firm will maximize profit with the production of

Accepted Answer

A) 6 units of output. 
B) 8 units of output. 
C) 10 units of output. 
D) 12 units of output. 
A) 6 units of output. 
B) 8 units of output. 
C) 10 units of output. 
D) 12 units of output.

Question 7

In a monopolistically competitive industry,firms set price

Accepted Answer

A) equal to marginal cost since each firm is a price taker. 
B) below marginal cost since each firm is a price taker. 
C) above marginal cost since each firm is a price setter. 
D) always a fraction of marginal cost since each firm is a price setter. 
A) equal to marginal cost since each firm is a price taker. 
B) below marginal cost since each firm is a price taker. 
C) above marginal cost since each firm is a price setter. 
D) always a fraction of marginal cost since each firm is a price setter.

Question 8

Scenario 17-1
Vacation Inns of America (VIA) has recently announced intentions of building a new hotel/resort complex in Myrtle Beach, South Carolina. Assume that the hotel/resort market in Myrtle Beach is characterized by monopolistic competition.
-Refer to Scenario 17-1.Existing hotels,motels,and lodging facilities in Myrtle Beach are likely to experience what kind of externality as a result of the new VIA hotel/resort?

Accepted Answer

A) Product-variety 
B) Business-stealing 
C) Competitive 
D) Advertising 
A) Product-variety 
B) Business-stealing 
C) Competitive 
D) Advertising

Question 9

Discuss how "brand names" may enhance the efficiency of markets in a less developed country.

Accepted Answer

Recognizable brand names signal quality

Question 10

A firm has the following cost structure:  
If this firm is in a typical monopolistically competitive market,it will likely produce

Accepted Answer

A) four or fewer units of output. 
B) five units of output. 
C) more than five units of output. 
D) None of the above are necessarily correct because there is not enough information to tell. 
A) four or fewer units of output. 
B) five units of output. 
C) more than five units of output. 
D) None of the above are necessarily correct because there is not enough information to tell.

Question 11

Perhaps it's not a problem at all,but if "too much choice" is a problem for consumers,it would occur in which market structure(s)?

Accepted Answer

A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Perfect competition and monopolistic competition 
A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Perfect competition and monopolistic competition

Question 12

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

Accepted Answer

A) True 
 B)False

Question 13

Critics of markets that are characterized by firms that sell "brand" name products argue that brand names encourage consumers to pay more for branded products that

Accepted Answer

A) have elastic demand curves. 
B) are very different from generic products. 
C) are indistinguishable from generic products. 
D) consumer-advocate groups have found to be inferior. 
A) have elastic demand curves. 
B) are very different from generic products. 
C) are indistinguishable from generic products. 
D) consumer-advocate groups have found to be inferior.

Question 14

Examples of monopolistically competitive markets include the markets for

Accepted Answer

A) restaurants and furniture. 
B) wheat and corn. 
C) postage stamps and wooden pencils. 
D) All of the above are correct. 
A) restaurants and furniture. 
B) wheat and corn. 
C) postage stamps and wooden pencils. 
D) All of the above are correct.

Question 15

Figure 17-5
  
-Refer to Figure 17-5.This figure depicts a situation in a monopolistically competitive market.What price will the monopolistically competitive firm charge in this market?

Accepted Answer

A) $60 
B) $70 
C) $75 
D) $80 
A) $60 
B) $70 
C) $75 
D) $80

Question 16

Since a firm in a monopolistically competitive market faces a

Accepted Answer

A) downward-sloping demand curve, it will always operate with excess capacity. 
B) downward-sloping demand curve, it will always operate at its efficient scale. 
C) perfectly elastic demand curve, it will always operate with excess capacity. 
D) perfectly inelastic demand curve, it will always operate at efficient scale. 
A) downward-sloping demand curve, it will always operate with excess capacity. 
B) downward-sloping demand curve, it will always operate at its efficient scale. 
C) perfectly elastic demand curve, it will always operate with excess capacity. 
D) perfectly inelastic demand curve, it will always operate at efficient scale.

Question 17

"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Accepted Answer

A) competitive markets, but not to monopolistically competitive markets or monopolies. 
B) competitive and monopolistically competitive markets, but not to monopolies. 
C) competitive markets, monopolistically competitive markets, and monopolies. 
D) None of the above is correct. 
A) competitive markets, but not to monopolistically competitive markets or monopolies. 
B) competitive and monopolistically competitive markets, but not to monopolies. 
C) competitive markets, monopolistically competitive markets, and monopolies. 
D) None of the above is correct.

Question 18

Figure 17-4
  
-Refer to Figure 17-4.Panel (b)is consistent with a firm in a monopolistically competitive market that is

Accepted Answer

A) not in long-run equilibrium. 
B) in long-run equilibrium. 
C) producing its efficient scale of output. 
D) earning a positive economic profit. 
A) not in long-run equilibrium. 
B) in long-run equilibrium. 
C) producing its efficient scale of output. 
D) earning a positive economic profit.

Question 19

Most businesses advertise their products and services.Some business use SPAM emails to advertise because the cost of a mass e-mail is close to zero.Other business spend millions of dollars to advertise in a 30-second spot during the super bowl.Having observed this real world data,economists argue that the amount of money that a business spends on advertising is a proxy for a good or service's

Accepted Answer

A) size. 
B) quality. 
C) newness. 
D) cost of production. 
A) size. 
B) quality. 
C) newness. 
D) cost of production.

Question 20

Firm A is a perfectly competitive firm.Firm B is a monopolistically competitive firm.Both firms are currently maximizing their respective profits.Which of the following statements is correct?

Accepted Answer

A) Both Firm A and Firm B would be eager to make an additional sale. 
B) Firm A would be eager to make an additional sale, but Firm B would not care whether it made an additional sale or not. 
C) Firm B would be eager to make an additional sale, but Firm A would not care whether it made an additional sale or not. 
D) Neither Firm A nor Firm B would care whether they made an additional sale or not. 
A) Both Firm A and Firm B would be eager to make an additional sale. 
B) Firm A would be eager to make an additional sale, but Firm B would not care whether it made an additional sale or not. 
C) Firm B would be eager to make an additional sale, but Firm A would not care whether it made an additional sale or not. 
D) Neither Firm A nor Firm B would care whether they made an additional sale or not.

Exam 17: Monopolistic Competition

Each firm in a monopolistically competitive firm faces a downward-sloping demand curve because

When consumers are exposed to additional choices that result from the introduction of a new product,

Both monopolistic competition and oligopoly are market structures

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Under which of the following market structures would consumers likely receive the most product variety?

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $20 and a constant marginal cost of $5 per unit.The firm will maximize profit with the production of

In a monopolistically competitive industry,firms set price

Discuss how "brand names" may enhance the efficiency of markets in a less developed country.

A firm has the following cost structure: If this firm is in a typical monopolistically competitive market,it will likely produce

Perhaps it's not a problem at all,but if "too much choice" is a problem for consumers,it would occur in which market structure(s)?

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

Critics of markets that are characterized by firms that sell "brand" name products argue that brand names encourage consumers to pay more for branded products that

Examples of monopolistically competitive markets include the markets for

Figure 17-5 -Refer to Figure 17-5.This figure depicts a situation in a monopolistically competitive market.What price will the monopolistically competitive firm charge in this market?

Since a firm in a monopolistically competitive market faces a

"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Figure 17-4 -Refer to Figure 17-4.Panel (b)is consistent with a firm in a monopolistically competitive market that is

Firm A is a perfectly competitive firm.Firm B is a monopolistically competitive firm.Both firms are currently maximizing their respective profits.Which of the following statements is correct?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters