Question 1

According to a Wall Street Journal article, hhgregg has differentiated itself from its competition, particularly from large chain stores such as Best Buy,

Accepted Answer

A) by charging lower prices. 
B) by providing better customer service. 
C) by selling inferior products. 
D) by offering discounts for cash sales. 
A) by charging lower prices. 
B) by providing better customer service. 
C) by selling inferior products. 
D) by offering discounts for cash sales.

Question 2

Figure 11.12
  
-Refer to Figure 11.12 to answer the following questions.
a.What is the productively efficient output?
b.What is the allocatively efficient output?
c.What is the amount of excess capacity?
d.Suppose the firm is currently producing 14 units.What happens if it increases output to 17 units?

Accepted Answer

a.The productively efficient output is 2

Question 3

Table 11.1
 $\begin{array}{|c|c|c|}
\hline \text { Quantity } & \begin{array}{c}
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array}{c}
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 7.50 & \$ 7.50 \
\hline 2 & 7.00 & 14.00 \
\hline 3 & 6.50 & 19.50 \
\hline 4 & 6.00 & 24.00 \
\hline 5 & 5.50 & 27.50 \
\hline 6 & 5.00 & 30.00 \
\hline
\end{array}$
-Refer to Table 11.1.The Table shows

Accepted Answer

A) an elastic segment of the demand curve. 
B) an inelastic segment of the demand curve. 
C) a demand curve with an elastic segment of the demand curve from $7.50 to $6.50 followed by an inelastic segment. 
D) a demand curve with an inelastic segment of the demand curve from $7.50 to $6.50 followed by an elastic segment. 
A) an elastic segment of the demand curve. 
B) an inelastic segment of the demand curve. 
C) a demand curve with an elastic segment of the demand curve from $7.50 to $6.50 followed by an inelastic segment. 
D) a demand curve with an inelastic segment of the demand curve from $7.50 to $6.50 followed by an elastic segment.

Question 4

Reebok has used Sidney Crosby to create the impression that Sidney Crosby hockey equipment is superior to any other hockey equipment.Reebok is attempting to

Accepted Answer

A) differentiate Sidney Crosby hockey equipment from other types of hockey equipment. 
B) lower the marginal cost of producing Sidney Crosby hockey equipment. 
C) increase its profit by raising the price of Sidney Crosby hockey equipment. 
D) convince consumers that Sidney Crosby hockey equipment is no different from other hockey equipment favored by celebrities. 
A) differentiate Sidney Crosby hockey equipment from other types of hockey equipment. 
B) lower the marginal cost of producing Sidney Crosby hockey equipment. 
C) increase its profit by raising the price of Sidney Crosby hockey equipment. 
D) convince consumers that Sidney Crosby hockey equipment is no different from other hockey equipment favored by celebrities.

Question 5

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

Accepted Answer

The answer of Draw a graph that shows the impact...

Question 6

-Refer to Figure 11.2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals E.

Accepted Answer

A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G. 
A) the area (G + H). 
B) the area (H - 
E) . 
C) the area (E + F)- (G + H). 
D) the area G.

Question 7

What is the profit-maximizing rule for a monopolistically competitive firm?

Accepted Answer

A) to produce a quantity that maximizes market share 
B) to produce a quantity that maximizes total revenue 
C) to produce a quantity such that marginal revenue equals marginal cost 
D) to produce a quantity such that price equals marginal cost 
A) to produce a quantity that maximizes market share 
B) to produce a quantity that maximizes total revenue 
C) to produce a quantity such that marginal revenue equals marginal cost 
D) to produce a quantity such that price equals marginal cost

Question 8

Which of the following is not an example of a monopolistically competitive market?

Accepted Answer

A) automobile producers 
B) supermarkets 
C) video stores 
D) makers of women's clothing 
A) automobile producers 
B) supermarkets 
C) video stores 
D) makers of women's clothing

Question 9

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

Accepted Answer

A) substitution effect. 
B) income effect. 
C) price effect. 
D) output effect. 
A) substitution effect. 
B) income effect. 
C) price effect. 
D) output effect.

Question 10

Figure 11.3
   
Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11.3.What is the area that represents the total fixed cost of production?

Accepted Answer

A) 0P₁aQₐ 
B) P₀adP₃ 
C) P₁bdP₃ 
D) That information cannot be determined from the graph. 
A) 0P₁aQₐ 
B) P₀adP₃ 
C) P₁bdP₃ 
D) That information cannot be determined from the graph.

Question 11

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

Accepted Answer

A) True 
 B)False

Question 12

If a firm faces a downward-sloping demand curve,

Accepted Answer

A) the demand for its product must be inelastic. 
B) it can control both price and quantity sold. 
C) it must reduce its price to sell more units. 
D) it will always make a profit. 
A) the demand for its product must be inelastic. 
B) it can control both price and quantity sold. 
C) it must reduce its price to sell more units. 
D) it will always make a profit.

Question 13

Figure 11.3
   
Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11.3.If the firm represented in the diagram is currently producing and selling Qₐ units, what is the price charged?

Accepted Answer

A) P₀ 
B) P₁ 
C) P₂ 
D) P₃ 
A) P₀ 
B) P₁ 
C) P₂ 
D) P₃

Question 14

Is a monopolistically competitive firm productively efficient?

Accepted Answer

A) No, because it does not produce at minimum average total cost. 
B) Yes, because it produces where marginal cost equals marginal revenue. 
C) No, because price is greater than marginal cost. 
D) Yes, because price equals average total cost. 
A) No, because it does not produce at minimum average total cost. 
B) Yes, because it produces where marginal cost equals marginal revenue. 
C) No, because price is greater than marginal cost. 
D) Yes, because price equals average total cost.

Question 15

Figure 11.3
   
Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11.3.What is the area that represents the loss made by the firm?

Accepted Answer

A) the area P₀adP₃ 
B) the area P₁bcP₂ 
C) the area P₀acP₂ 
D) the area P₂cdP₃ 
A) the area P₀adP₃ 
B) the area P₁bcP₂ 
C) the area P₀acP₂ 
D) the area P₂cdP₃

Question 16

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Accepted Answer

A) new rivals entering the market. 
B) a decrease in demand for its product. 
C) demand for the firm's product becomes more elastic. 
D) a decrease in the number of rival products. 
A) new rivals entering the market. 
B) a decrease in demand for its product. 
C) demand for the firm's product becomes more elastic. 
D) a decrease in the number of rival products.

Question 17

Figure 11.11
  
-Refer to Figure 11.11.The diagram demonstrates that

Accepted Answer

A) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qₐ. 
B) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qₐ, because of product differentiation. 
C) it is possible for a monopolistic competitor to produce the productively efficient output level, Qₐ, if it is willing to lower its price from Pb to Pₐ. 
D) in the long run, the monopolistic competitor produces the minimum-cost output level, Qₐ, but in the short run its output of Qb is not cost minimizing. 
A) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qₐ. 
B) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qₐ, because of product differentiation. 
C) it is possible for a monopolistic competitor to produce the productively efficient output level, Qₐ, if it is willing to lower its price from Pb to Pₐ. 
D) in the long run, the monopolistic competitor produces the minimum-cost output level, Qₐ, but in the short run its output of Qb is not cost minimizing.

Question 18

Figure 11.6
  
-Refer to Figure 11.6.The diagram depicts a firm

Accepted Answer

A) in a constant cost industry. 
B) in an increasing cost industry. 
C) in long run equilibrium. 
D) that is making short run losses. 
A) in a constant cost industry. 
B) in an increasing cost industry. 
C) in long run equilibrium. 
D) that is making short run losses.

Question 19

If Starbucks is successful at luring away competitor's customers with its new health and wellness stores, what will be the effect on Starbucks' demand and marginal revenue curves?

Accepted Answer

A) They will both shift to the right. 
B) They will both shift to the left. 
C) Demand will shift to the left and marginal revenue will shift to the right. 
D) Demand will shift to the right and marginal revenue will shift to the left. 
A) They will both shift to the right. 
B) They will both shift to the left. 
C) Demand will shift to the left and marginal revenue will shift to the right. 
D) Demand will shift to the right and marginal revenue will shift to the left.

Question 20

Figure 11.10
  
-Refer to Figure 11.10.What is the allocatively efficient output for the firm represented in the diagram?

Accepted Answer

A) Qf units 
B) Qg units 
C) Qh units 
D) Qⱼ units 
A) Qf units 
B) Qg units 
C) Qh units 
D) Qⱼ units

According to a Wall Street Journal article, hhgregg has differentiated itself from its competition, particularly from large chain stores such as Best Buy,

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.The Table shows

Reebok has used Sidney Crosby to create the impression that Sidney Crosby hockey equipment is superior to any other hockey equipment.Reebok is attempting to

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

-Refer to Figure 11.2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals E.

What is the profit-maximizing rule for a monopolistically competitive firm?

Which of the following is not an example of a monopolistically competitive market?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.What is the area that represents the total fixed cost of production?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

If a firm faces a downward-sloping demand curve,

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.If the firm represented in the diagram is currently producing and selling Qₐ units, what is the price charged?

Is a monopolistically competitive firm productively efficient?

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.What is the area that represents the loss made by the firm?

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Figure 11.11 -Refer to Figure 11.11.The diagram demonstrates that

Figure 11.6 -Refer to Figure 11.6.The diagram depicts a firm

If Starbucks is successful at luring away competitor's customers with its new health and wellness stores, what will be the effect on Starbucks' demand and marginal revenue curves?

Figure 11.10 -Refer to Figure 11.10.What is the allocatively efficient output for the firm represented in the diagram?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 11: Monopolistic Competition

According to a Wall Street Journal article, hhgregg has differentiated itself from its competition, particularly from large chain stores such as Best Buy,

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.The Table shows

Reebok has used Sidney Crosby to create the impression that Sidney Crosby hockey equipment is superior to any other hockey equipment.Reebok is attempting to

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

-Refer to Figure 11.2.The marginal revenue from selling the additional unit Qb instead of Qₐ equals E.

What is the profit-maximizing rule for a monopolistically competitive firm?

Which of the following is not an example of a monopolistically competitive market?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.What is the area that represents the total fixed cost of production?

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

If a firm faces a downward-sloping demand curve,

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.If the firm represented in the diagram is currently producing and selling Qₐ units, what is the price charged?

Is a monopolistically competitive firm productively efficient?

Figure 11.3 Figure 11.3 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 11.3.What is the area that represents the loss made by the firm?

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Figure 11.11 -Refer to Figure 11.11.The diagram demonstrates that

Figure 11.6 -Refer to Figure 11.6.The diagram depicts a firm

If Starbucks is successful at luring away competitor's customers with its new health and wellness stores, what will be the effect on Starbucks' demand and marginal revenue curves?

Figure 11.10 -Refer to Figure 11.10.What is the allocatively efficient output for the firm represented in the diagram?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters