Exam 11: Monopolistic Competition

Table 11.1 Quantity Price (dollars) Total Revenue (dollars) 1 \ 7.50 \ 7.50 2 7.00 14.00 3 6.50 19.50 4 6.00 24.00 5 5.50 27.50 6 5.00 30.00 -Refer to Table 11.1.What portion of the marginal revenue of the 5th unit is due to the output effect and what portion is due to the price effect?

In theory, in the long run, monopolistically competitive firms earns zero profits.However, in reality there are some ways by which a firm can avoid losing profits.Which of the following is one such way?

A firm that successfully differentiates its product or lowers its average cost of production creates

The key characteristics of a monopolistically competitive market structure include

What is the difference between zero accounting profit and zero economic profit?

A major difference between monopolistic competition and perfect competition is

What is the difference between the terms "marketing" and "advertising"?

In the highly competitive fast-food restaurant market, brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers.

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated.How do these problems affect the innovating firm?

For productive efficiency to hold,

Which of the following is true of a typical firm in a monopolistically competitive industry?

Suppose Jason owns a small pastry shop.Jason wants to maximize his profit, and thinking back to the college microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost.Will Jason's strategy necessarily maximize profits for his pastry shop?

One reason why the coffeehouse market is competitive is that

Table 11.2 Quantity (cases) Price (dollars) Total Revenue (dollars) Total Cost (dollars) 1 \ 75 \ 75 \ 60 2 70 140 85 3 65 195 105 4 60 240 115 5 55 275 130 6 50 300 155 7 45 315 190 8 40 320 230 9 35 315 280 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 11.2 shows the firm's demand and cost schedules. -Refer to Table 11.2.What is Eco Energy's profit?

Consumers benefit from monopolistic competition by

For a profit-maximizing monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Which of the following statements is true about advertising by a monopolistically competitive firm?

Table 11.3 Quantity Price (dollars) Total Revenue (dollars) Total Variable Cost (dollars) Total Cost (dollars) 0 \ 21 \ 0 \ 0 \ 50 1 20 20 16 66 2 19 38 31 81 3 18 54 45 95 4 17 68 59 109 5 16 80 75 125 6 15 90 93 143 7 14 98 112 162 8 13 104 140 190 9 12 108 180 230 10 11 110 230 280 Table 11.3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 11.3.What is the amount of the firm's loss at its optimal output level?

For allocative efficiency to hold,