Question 1

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 2

One of the major benefits to society of monopolistic competition is

Accepted Answer

A) high prices. 
B) restricted output. 
C) product differentiation. 
D) the excess capacity. 
E) the markup. 
A) high prices. 
B) restricted output. 
C) product differentiation. 
D) the excess capacity. 
E) the markup.

Question 3

In monopolistic competition, the products of different sellers are

Accepted Answer

A) identical. 
B) similar but slightly different. 
C) unique without any close or perfect substitutes. 
D) perfect substitutes. 
E) either identical or differentiated. 
A) identical. 
B) similar but slightly different. 
C) unique without any close or perfect substitutes. 
D) perfect substitutes. 
E) either identical or differentiated.

Question 4

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.A firm in mon

Question 5

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

Accepted Answer

A) 3,600. 
B) 100. 
C) 625. 
D) 25. 
E) 2,500. 
A) 3,600. 
B) 100. 
C) 625. 
D) 25. 
E) 2,500.

Question 6

A differentiated product has

Accepted Answer

A) many perfect substitutes. 
B) no close substitutes. 
C) no substitutes of any kind. 
D) close but not perfect substitutes. 
E) many different complements. 
A) many perfect substitutes. 
B) no close substitutes. 
C) no substitutes of any kind. 
D) close but not perfect substitutes. 
E) many different complements.

Question 7

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 8

A firm in monopolistic competition definitely incurs an economic loss if

Accepted Answer

A) price equals marginal revenue. 
B) price is less than average total cost. 
C) marginal revenue equals marginal cost. 
D) marginal revenue is less than average total cost. 
E) price is greater than marginal cost. 
A) price equals marginal revenue. 
B) price is less than average total cost. 
C) marginal revenue equals marginal cost. 
D) marginal revenue is less than average total cost. 
E) price is greater than marginal cost.

Question 9

Concentration ratios

Accepted Answer

A) refer to the concentration of customers in a certain area. 
B) measure whether the market is dominated by a small number of firms. 
C) measure the concentration of a large number of firms in a certain area. 
D) have high values for perfect competition. 
E) measure how concentrated a firm's sales are among certain types of goods. 
A) refer to the concentration of customers in a certain area. 
B) measure whether the market is dominated by a small number of firms. 
C) measure the concentration of a large number of firms in a certain area. 
D) have high values for perfect competition. 
E) measure how concentrated a firm's sales are among certain types of goods.

Question 10

-Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

Accepted Answer

@#IMG-DLM& The compl

Question 11

In the example of the Nike running shoe, we see that

Accepted Answer

A) selling costs account for over half of a shoe's retail price. 
B) materials actually account for two-thirds of the retail price of the shoes. 
C) taxes account for one-quarter of the retail price of the shoes. 
D) production costs exceed selling costs by a wide margin. 
E) raw materials costs are by far the largest component of the total costs of producing the shoes. 
A) selling costs account for over half of a shoe's retail price. 
B) materials actually account for two-thirds of the retail price of the shoes. 
C) taxes account for one-quarter of the retail price of the shoes. 
D) production costs exceed selling costs by a wide margin. 
E) raw materials costs are by far the largest component of the total costs of producing the shoes.

Question 12

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 13

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

Accepted Answer

A) sum 
B) square 
C) square root 
D) cube 
E) negative 
A) sum 
B) square 
C) square root 
D) cube 
E) negative

Question 14

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves.
-To maximize its profit, the firm in the figure above will produce ________ jeans and set a price ________ per pair of jeans.

Accepted Answer

A) 150; between $50 and $25 
B) 125; $25 
C) 125; $50 
D) 125; $75 
E) None of the above answers are correct. 
A) 150; between $50 and $25 
B) 125; $25 
C) 125; $50 
D) 125; $75 
E) None of the above answers are correct.

Question 15

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market, the demand for the shampoo becomes ________ temporarily and economic profit ________.

Accepted Answer

A) more elastic; decreases 
B) less elastic; increases 
C) more elastic; increases 
D) less elastic; decreases 
E) unit elastic; increases 
A) more elastic; decreases 
B) less elastic; increases 
C) more elastic; increases 
D) less elastic; decreases 
E) unit elastic; increases

Question 16

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent, 6 percent, 7 percent, and 8 percent of total revenue?

Accepted Answer

A) 26 percent 
B) 174 percent 
C) 1,680 
D) There is enough information given to answer the question, but none of the answers above are correct. 
E) There is not enough information given to answer the question. 
A) 26 percent 
B) 174 percent 
C) 1,680 
D) There is enough information given to answer the question, but none of the answers above are correct. 
E) There is not enough information given to answer the question.

Question 17

-Suppose there are ten firms that occupy the Odell, Oregon cherry pie market.The market share of each firm is listed in the above table.
a∙What is the Herfindahl-Hirschman Index for this market?
b∙If Firm H and Firm A merge, what is the new Herfindahl-Hirschman Index for this market?
c∙A severe winter causes every firm except A, B, and E to close.With only these three firms operating, Firm A's market share is 71 percent, Firm B's market share is 23 percent, and Firm C's market share is 6 percent.What is the Herfindahl-Hirschman Index for this market now?

Accepted Answer

a∙The Herfindahl-Hirschman Ind

Question 18

At a long-run equilibrium in monopolistic competition, price equals

Accepted Answer

A) average total cost. 
B) marginal cost but not marginal revenue. 
C) marginal revenue but not marginal cost. 
D) zero. 
E) marginal revenue and marginal cost. 
A) average total cost. 
B) marginal cost but not marginal revenue. 
C) marginal revenue but not marginal cost. 
D) zero. 
E) marginal revenue and marginal cost.

Question 19

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

Accepted Answer

The HHI equals 20² + 20² + 15²

Question 20

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.

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

One of the major benefits to society of monopolistic competition is

In monopolistic competition, the products of different sellers are

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

A differentiated product has

How do product development and marketing affect a firm in monopolistic competition?

A firm in monopolistic competition definitely incurs an economic loss if

Concentration ratios

-Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

In the example of the Nike running shoe, we see that

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

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -To maximize its profit, the firm in the figure above will produce jeans and set a price per pair of jeans.

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market, the demand for the shampoo becomes temporarily and economic profit .

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent, 6 percent, 7 percent, and 8 percent of total revenue?

At a long-run equilibrium in monopolistic competition, price equals

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

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

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

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

One of the major benefits to society of monopolistic competition is

In monopolistic competition, the products of different sellers are

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

A differentiated product has

How do product development and marketing affect a firm in monopolistic competition?

A firm in monopolistic competition definitely incurs an economic loss if

Concentration ratios

-Draw an example of a firm in monopolistic competition that is earning an economic profit.Be sure to label all the curves.Indicate the area that equals the firm's economic profit.

In the example of the Nike running shoe, we see that

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

The Herfindahl-Hirschman Index is the ________ of the percentage market share of each firm summed over the largest 50 firms in a market.

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -To maximize its profit, the firm in the figure above will produce ________ jeans and set a price ________ per pair of jeans.

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market, the demand for the shampoo becomes ________ temporarily and economic profit ________.

What is the four-firm concentration ratio if the four largest firms in an industry account for 5 percent, 6 percent, 7 percent, and 8 percent of total revenue?

At a long-run equilibrium in monopolistic competition, price equals

-There are 9 firms in an industry with market shares in the table above.Calculate the HHI for the industry.What kind of market does this operate in and why?

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

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

The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -To maximize its profit, the firm in the figure above will produce jeans and set a price per pair of jeans.

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market, the demand for the shampoo becomes temporarily and economic profit .