Question 1

In the long run, a firm in monopolistic competition will

Accepted Answer

A) produce so that its price equals marginal cost. 
B) operate at the minimum of the long-run average cost. 
C) over utilize its insufficient capacity. 
D) produce so that its price equals average total cost. 
E) be dependent on the other firms in the industry. 
A) produce so that its price equals marginal cost. 
B) operate at the minimum of the long-run average cost. 
C) over utilize its insufficient capacity. 
D) produce so that its price equals average total cost. 
E) be dependent on the other firms in the industry.

Question 2

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve, its MC curve, its demand curve, and its MR curve.

Accepted Answer

In order to maintain (or regain)economic

Question 3

Firms in monopolistic competition compete on
I∙quality.
Ii∙price.
Iii∙marketing.

Accepted Answer

A) i and ii 
B) ii only 
C) ii and iii 
D) i and iii 
E) i, ii, and iii 
A) i and ii 
B) ii only 
C) ii and iii 
D) i and iii 
E) i, ii, and iii

Question 4

When a monopolistically competitive firm's demand curve shifts leftward, what happens to its marginal revenue curve?

Accepted Answer

A) Nothing, the marginal revenue curve is unchanged. 
B) It disappears. 
C) It shifts rightward. 
D) It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic. 
A) Nothing, the marginal revenue curve is unchanged. 
B) It disappears. 
C) It shifts rightward. 
D) It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic.

Question 5

Why is collusion about the price and amount of output impossible in monopolistic competition?

Accepted Answer

The smaller the number of firm

Question 6

The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-As long as the firm illustrated above remains open, it will set a price of ________ per month and it will ________.

Accepted Answer

A) $50; make an economic profit 
B) $50; incur an economic loss 
C) $40; make an economic profit 
D) $40; incur an economic loss 
E) less than $20; incur an economic loss 
A) $50; make an economic profit 
B) $50; incur an economic loss 
C) $40; make an economic profit 
D) $40; incur an economic loss 
E) less than $20; incur an economic loss

Question 7

-The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry.What is the four-firm concentration ratio for the industry?

Accepted Answer

A) 200 
B) 20 percent 
C) 25 percent 
D) 80 percent 
E) 100 percent 
A) 200 
B) 20 percent 
C) 25 percent 
D) 80 percent 
E) 100 percent

Question 8

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market.If Kevin trains 5 clients per day, he will ________ his profit and will ________.

Accepted Answer

A) maximize; make zero economic profit 
B) not maximize; make zero economic profit anyway 
C) maximize; make an economic profit 
D) not maximize; make an economic profit anyway 
E) not maximize; incur an economic loss 
A) maximize; make zero economic profit 
B) not maximize; make zero economic profit anyway 
C) maximize; make an economic profit 
D) not maximize; make an economic profit anyway 
E) not maximize; incur an economic loss

Question 9

A firm's markup is

Accepted Answer

A) the difference between average total cost with and without advertising. 
B) the difference between demand and marginal revenue. 
C) a signal of product quality. 
D) the difference between price and marginal cost. 
E) the result of producing less than the efficient scale. 
A) the difference between average total cost with and without advertising. 
B) the difference between demand and marginal revenue. 
C) a signal of product quality. 
D) the difference between price and marginal cost. 
E) the result of producing less than the efficient scale.

Question 10

If the four-firm concentration ratio of an industry is

Accepted Answer

A) near 100, the industry is considered very competitive. 
B) less than 40, the industry is considered an oligopoly. 
C) over 40, the industry is considered monopolistic competition. 
D) less than 40, the industry is considered monopolistic competition. 
E) close to 0, the industry is considered a monopoly. 
A) near 100, the industry is considered very competitive. 
B) less than 40, the industry is considered an oligopoly. 
C) over 40, the industry is considered monopolistic competition. 
D) less than 40, the industry is considered monopolistic competition. 
E) close to 0, the industry is considered a monopoly.

Question 11

In monopolistic competition, there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

Accepted Answer

A) high concentration, as indicated by the large concentration ratio 
B) product differentiation 
C) freedom of entry and exit 
D) marginal cost rises as more output is produced 
E) the fact there are many firms in the market 
A) high concentration, as indicated by the large concentration ratio 
B) product differentiation 
C) freedom of entry and exit 
D) marginal cost rises as more output is produced 
E) the fact there are many firms in the market

Question 12

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

Accepted Answer

A) 1850 
B) 2000 
C) 6400 
D) 100 
E) 20 
A) 1850 
B) 2000 
C) 6400 
D) 100 
E) 20

Question 13

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

Accepted Answer

A) profit 
B) supply 
C) total revenue 
D) total cost 
E) marginal cost 
A) profit 
B) supply 
C) total revenue 
D) total cost 
E) marginal cost

Question 14

Which of the following is the best example of a monopolistically competitive industry?

Accepted Answer

A) land-based long distance telephone service 
B) wheat farming 
C) the local electricity producer 
D) manufacturing of shirts 
E) cable television 
A) land-based long distance telephone service 
B) wheat farming 
C) the local electricity producer 
D) manufacturing of shirts 
E) cable television

Question 15

For a firm in monopolistic competition, define efficient scale and excess capacity.Briefly explain each.

Accepted Answer

The efficient scale is the quantity prod

Question 16

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

Accepted Answer

The firm produces where its marginal cos

Question 17

When the Herfindahl-Hirschman Index for an industry is

Accepted Answer

A) very small, the industry can be perfectly competitive. 
B) very large, the industry can be perfectly competitive. 
C) 10,000, the industry is perfectly competitive. 
D) very small, the industry can be a monopoly. 
E) above 5,000 the industry is considered not very competitive and when it is below 5,000 the industry is considered very competitive. 
A) very small, the industry can be perfectly competitive. 
B) very large, the industry can be perfectly competitive. 
C) 10,000, the industry is perfectly competitive. 
D) very small, the industry can be a monopoly. 
E) above 5,000 the industry is considered not very competitive and when it is below 5,000 the industry is considered very competitive.

Question 18

What does monopolistic competition have in common with perfect competition?

Accepted Answer

A) a large number of firms and freedom of entry and exit 
B) a standardized product 
C) product differentiation 
D) the ability to make an economic profit in the long run 
E) barriers to exit but no barriers to entry 
A) a large number of firms and freedom of entry and exit 
B) a standardized product 
C) product differentiation 
D) the ability to make an economic profit in the long run 
E) barriers to exit but no barriers to entry

Question 19

Once a firm in monopolistic competition has determined how much to produce, the firm determines its price by referring to its

Accepted Answer

A) demand curve. 
B) marginal cost curve. 
C) marginal revenue curve. 
D) average total cost curve. 
E) average variable cost curve. 
A) demand curve. 
B) marginal cost curve. 
C) marginal revenue curve. 
D) average total cost curve. 
E) average variable cost curve.

Question 20

If firms in monopolistic competition are making economic profits, then

Accepted Answer

A) they can expect to earn the profits indefinitely. 
B) new rivals enter the industry and the demand for any seller's good decreases. 
C) the market demand becomes more inelastic. 
D) the industry is in long-run equilibrium. 
E) new rivals enter the industry and the demand for any seller's good increases. 
A) they can expect to earn the profits indefinitely. 
B) new rivals enter the industry and the demand for any seller's good decreases. 
C) the market demand becomes more inelastic. 
D) the industry is in long-run equilibrium. 
E) new rivals enter the industry and the demand for any seller's good increases.

In the long run, a firm in monopolistic competition will

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve, its MC curve, its demand curve, and its MR curve.

Firms in monopolistic competition compete on I∙quality. Ii∙price. Iii∙marketing.

When a monopolistically competitive firm's demand curve shifts leftward, what happens to its marginal revenue curve?

Why is collusion about the price and amount of output impossible in monopolistic competition?

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open, it will set a price of per month and it will .

-The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry.What is the four-firm concentration ratio for the industry?

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market.If Kevin trains 5 clients per day, he will his profit and will .

A firm's markup is

If the four-firm concentration ratio of an industry is

In monopolistic competition, there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

Which of the following is the best example of a monopolistically competitive industry?

For a firm in monopolistic competition, define efficient scale and excess capacity.Briefly explain each.

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

When the Herfindahl-Hirschman Index for an industry is

What does monopolistic competition have in common with perfect competition?

Once a firm in monopolistic competition has determined how much to produce, the firm determines its price by referring to its

If firms in monopolistic competition are making economic profits, then

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

In the long run, a firm in monopolistic competition will

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve, its MC curve, its demand curve, and its MR curve.

Firms in monopolistic competition compete on I∙quality. Ii∙price. Iii∙marketing.

When a monopolistically competitive firm's demand curve shifts leftward, what happens to its marginal revenue curve?

Why is collusion about the price and amount of output impossible in monopolistic competition?

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open, it will set a price of ________ per month and it will ________.

-The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry.What is the four-firm concentration ratio for the industry?

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market.If Kevin trains 5 clients per day, he will ________ his profit and will ________.

A firm's markup is

If the four-firm concentration ratio of an industry is

In monopolistic competition, there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

Which of the following is the best example of a monopolistically competitive industry?

For a firm in monopolistic competition, define efficient scale and excess capacity.Briefly explain each.

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

When the Herfindahl-Hirschman Index for an industry is

What does monopolistic competition have in common with perfect competition?

Once a firm in monopolistic competition has determined how much to produce, the firm determines its price by referring to its

If firms in monopolistic competition are making economic profits, then

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 shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open, it will set a price of per month and it will .

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market.If Kevin trains 5 clients per day, he will his profit and will .