Question 1

Positive economic profit encourages new firms to enter an industry.

Accepted Answer

A) True 
 B)False

Question 2

In a perfectly competitive market,an individual firm's demand curve is horizontal at the market price.

Accepted Answer

A) True 
 B)False

Question 3

Explain the conditions that must be satisfied for a monopolistically competitive industry to be in long-run equilibrium.

Accepted Answer

For the industry to be in long-run equil

Question 4

The cost of paying celebrities to advertise a product is always less than the increase in profits.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following goods are NOT sold in a monopolistically competitive market?

Accepted Answer

A)  computer software 
B)  toothpaste 
C)  toilet paper 
D)  oil 
A)  computer software 
B)  toothpaste 
C)  toilet paper 
D)  oil

Question 6

If producers differentiate themselves by location,consumers can reduce their travel costs.

Accepted Answer

A) True 
 B)False

Question 7

The condition for long-run equilibrium in a monopolistically competitive industry is

Accepted Answer

A)  price equals average total cost. 
B)  price equals marginal cost. 
C)  price equals marginal revenue. 
D)  marginal cost equals average total cost. 
A)  price equals average total cost. 
B)  price equals marginal cost. 
C)  price equals marginal revenue. 
D)  marginal cost equals average total cost.

Question 8

-Refer to Figure 11.2.In the long run,the monopolistic competitor would charge a price of ________ per unit.

Accepted Answer

A)  0A 
B)  0B 
C)  0F 
D)  BA 
A)  0A 
B)  0B 
C)  0F 
D)  BA

Question 9

-Refer to Figure 11.2.In the long run,the monopolistic competitor would earn an economic profit equal to the area

Accepted Answer

A)  0AFD. 
B)  AHE0. 
C)  0BGD. 
D)  none of these 
A)  0AFD. 
B)  AHE0. 
C)  0BGD. 
D)  none of these

Question 10

Monopolistic competition is NOT characterized by

Accepted Answer

A)  slightly different products. 
B)  many sellers. 
C)  firms with no control over price. 
D)  the absence of barriers to entry. 
A)  slightly different products. 
B)  many sellers. 
C)  firms with no control over price. 
D)  the absence of barriers to entry.

Question 11

Firms in monopolistically competitive markets sell identical products.

Accepted Answer

A) True 
 B)False

Question 12

The demand curve facing a monopolistically competitive firm is

Accepted Answer

A)  horizontal at the going market price. 
B)  downward sloping and less than the market demand curve. 
C)  downward sloping and greater than the market demand curve. 
D)  the same as the market demand curve. 
A)  horizontal at the going market price. 
B)  downward sloping and less than the market demand curve. 
C)  downward sloping and greater than the market demand curve. 
D)  the same as the market demand curve.

Question 13

No barriers to entry in a market implies that,in the long run,economic profit will be

Accepted Answer

A)  above average. 
B)  zero. 
C)  equal to accounting profit. 
D)  none of the above 
A)  above average. 
B)  zero. 
C)  equal to accounting profit. 
D)  none of the above

Question 14

Monopolistically competitive firms tend to operate on the positively-sloped portion of their average cost curves.

Accepted Answer

A) True 
 B)False

Question 15

-Refer to Figure 11.2.In the long run,the monopolistic competitor would generate total cost equal to the area

Accepted Answer

A)  0AFD. 
B)  AHE0. 
C)  AFGB. 
D)  0BGD. 
A)  0AFD. 
B)  AHE0. 
C)  AFGB. 
D)  0BGD.

Question 16

The demand for a product of a monopolistically competitive firm is very price inelastic.

Accepted Answer

A) True 
 B)False

Question 17

The main purpose of advertising is to inform the consumers about a product's features.

Accepted Answer

A) True 
 B)False

Question 18

Product differentiation is beneficial because it

Accepted Answer

A)  ensures larger companies can grow while smaller companies fail. 
B)  allows the economy to satisfy a wide range of tastes and preferences. 
C)  reduces competition in the market. 
D)  all of the above 
A)  ensures larger companies can grow while smaller companies fail. 
B)  allows the economy to satisfy a wide range of tastes and preferences. 
C)  reduces competition in the market. 
D)  all of the above

Question 19

Which type of profit-maximizing firm will choose to produce where price equals marginal cost?

Accepted Answer

A)  perfect competition 
B)  perfect competition and monopolistic competition 
C)  monopolistic competition 
D)  all types of firms 
A)  perfect competition 
B)  perfect competition and monopolistic competition 
C)  monopolistic competition 
D)  all types of firms

Question 20

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

Accepted Answer

A) True 
 B)False

Positive economic profit encourages new firms to enter an industry.

In a perfectly competitive market,an individual firm's demand curve is horizontal at the market price.

Explain the conditions that must be satisfied for a monopolistically competitive industry to be in long-run equilibrium.

The cost of paying celebrities to advertise a product is always less than the increase in profits.

Which of the following goods are NOT sold in a monopolistically competitive market?

If producers differentiate themselves by location,consumers can reduce their travel costs.

The condition for long-run equilibrium in a monopolistically competitive industry is

-Refer to Figure 11.2.In the long run,the monopolistic competitor would charge a price of ________ per unit.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would earn an economic profit equal to the area

Monopolistic competition is NOT characterized by

Firms in monopolistically competitive markets sell identical products.

The demand curve facing a monopolistically competitive firm is

No barriers to entry in a market implies that,in the long run,economic profit will be

Monopolistically competitive firms tend to operate on the positively-sloped portion of their average cost curves.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would generate total cost equal to the area

The demand for a product of a monopolistically competitive firm is very price inelastic.

The main purpose of advertising is to inform the consumers about a product's features.

Product differentiation is beneficial because it

Which type of profit-maximizing firm will choose to produce where price equals marginal cost?

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 11: Market Entry and Monopolistic Competition

Positive economic profit encourages new firms to enter an industry.

In a perfectly competitive market,an individual firm's demand curve is horizontal at the market price.

Explain the conditions that must be satisfied for a monopolistically competitive industry to be in long-run equilibrium.

The cost of paying celebrities to advertise a product is always less than the increase in profits.

Which of the following goods are NOT sold in a monopolistically competitive market?

If producers differentiate themselves by location,consumers can reduce their travel costs.

The condition for long-run equilibrium in a monopolistically competitive industry is

-Refer to Figure 11.2.In the long run,the monopolistic competitor would charge a price of ________ per unit.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would earn an economic profit equal to the area

Monopolistic competition is NOT characterized by

Firms in monopolistically competitive markets sell identical products.

The demand curve facing a monopolistically competitive firm is

No barriers to entry in a market implies that,in the long run,economic profit will be

Monopolistically competitive firms tend to operate on the positively-sloped portion of their average cost curves.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would generate total cost equal to the area

The demand for a product of a monopolistically competitive firm is very price inelastic.

The main purpose of advertising is to inform the consumers about a product's features.

Product differentiation is beneficial because it

Which type of profit-maximizing firm will choose to produce where price equals marginal cost?

Like firms in perfect competition,firms in monopolistic competition will earn zero economic profit in the long run.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters