Exam 14: Monopolistic Competition

Use the figure below to answer the following questions. Figure 14.2.3 -Refer to Figure 14.2.3. Which demand curve does this monopolistically competitive firm face in the long run?

For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve

Use the figure below to answer the following questions. Figure 14.2.6 -Refer to Figure 14.2.6, which shows the demand curve, marginal revenue curve and cost curves faced by Gap. Gap maximizes its profit if it sells ________ jackets per day.

Use the information below to answer the following question. Fact 14.3.1 Suppose that at one of the Talbots shops, marginal cost of a coat is constant at $150, and total fixed cost is $3,000 a day. The shop maximizes its profit by selling 15 coats a day at $500 per coat. Then the shops nearby increase their advertising. The Talbots shop responds by spending $1,500 a day more on advertising its coats. As a result, its profit-maximizing number of coats sold increases to 25 a day at $400 per coat. -Refer to Fact 14.3.1. As a result of increased advertising, Talbots' markup

Use the figure below to answer the following questions. Figure 14.2.3 -Refer to Figure 14.2.3. Assume this firm faces demand curve D₁.To maximize economic profit, this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.

Use the information below to answer the following questions. Fact 14.2.1 Groceries for the Gourmet Palate No food, it seems, is safe from being repackaged to look like an upscale product. Samuel Adams' $120 Utopias, in a ridiculous copper-covered 24-oz. bottle meant to resemble an old-fashioned brew kettle, is barely beer. It's not carbonated like a Bud, but aged in oak barrels like scotch. It has a vintage year, like a Bordeaux, is light, complex, and free of any alcohol sting, despite having six times as much alcohol content as a regular can of brew. Source: Time, April 14, 2008 -Refer to Fact 14.2.1. The Utopia's price of $120 is ________ marginal cost in the short run and ________ marginal cost in the long run.

The decision to undertake product development in monopolistic competition is made by comparing the

Other than by adjusting price, the two main ways in which a firm in monopolistic competition competes with other firms are by ________ and ________.

One factor that distinguishes a monopoly from monopolistic competition is that

In monopolistic competition

Use the information below to answer the following questions. Fact 14.1.1 For automobiles the HHI is 2,350, for sporting goods it is 161, for batteries it is 2,883, and for jewellery it is 81. -Refer to Fact 14.1.1. The market for batteries is ________ and the market for jewellery is ________.

Excess capacity in monopolistically competitive firms occurs because

When comparing perfect competition and monopolistic competition, we find that

What will happen in the long run if firms in monopolistic competition incur economic loss?

Expenditures on advertising

Use the figure below to answer the following questions. Figure 14.2.2 -Refer to Figure 14.2.2. This firm

Advertising and brand names

Use the information below to answer the following questions. Fact 14.1.1 For automobiles the HHI is 2,350, for sporting goods it is 161, for batteries it is 2,883, and for jewellery it is 81. -Refer to Fact 14.1.1. The market for automobiles is ________ and the market for sporting goods is ________.

Mrs. Smith's bakery shop is a firm in monopolistic competition. If in the short run Mrs. Smith incurs an economic loss, she will keep producing as long as

Monopolistically competitive firms engaging in advertising will definitely achieve which of the following?