Question 1

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

Accepted Answer

A) True 
 B)False

Question 2

Empirical studies have shown that entry leads to lower prices and profit.

Accepted Answer

A) True 
 B)False

Question 3

-Refer to Figure 11.2.In the long run,the monopolistic competitor would produce ________ units.

Accepted Answer

A)  0C 
B)  0D 
C)  0E 
D)  none of these 
A)  0C 
B)  0D 
C)  0E 
D)  none of these

Question 4

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

Accepted Answer

A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly 
A)  perfect competition 
B)  monopolistic competition 
C)  oligopoly 
D)  monopoly

Question 5

If firms in a monopolistically competitive industry are earning economic profits,then in the long run

Accepted Answer

A)  these firms can continue earning economic profits because entry into the industry is blocked. 
B)  new firms producing close substitutes will continue to enter the market until economic profit is zero. 
C)  new firms producing the exact same product will enter the industry and this entry will continue until economic profit is zero. 
D)  the government will most likely regulate firms in this industry to reduce the economic profits. 
A)  these firms can continue earning economic profits because entry into the industry is blocked. 
B)  new firms producing close substitutes will continue to enter the market until economic profit is zero. 
C)  new firms producing the exact same product will enter the industry and this entry will continue until economic profit is zero. 
D)  the government will most likely regulate firms in this industry to reduce the economic profits.

Question 6

In monopolistic competition,the firm can increase price and still sell some output because

Accepted Answer

A)  there is no free entry. 
B)  they are producing a product for which there is no close substitute. 
C)  they are colluding with other firms to set price. 
D)  they are producing a product that has some degree of differentiation. 
A)  there is no free entry. 
B)  they are producing a product for which there is no close substitute. 
C)  they are colluding with other firms to set price. 
D)  they are producing a product that has some degree of differentiation.

Question 7

In a monopolistically competitive industry,there are many firms because

Accepted Answer

A)  there are relatively large economies of scale. 
B)  there are relatively small economies of scale. 
C)  individual firms are not distinguishable from the total market. 
D)  products are easily produced. 
A)  there are relatively large economies of scale. 
B)  there are relatively small economies of scale. 
C)  individual firms are not distinguishable from the total market. 
D)  products are easily produced.

Question 8

Monopolistically competitive firms achieve the degree of market power they command through

Accepted Answer

A)  size. 
B)  product differentiation. 
C)  collusion. 
D)  barriers to entry. 
A)  size. 
B)  product differentiation. 
C)  collusion. 
D)  barriers to entry.

Question 9

If a product is an inferior product,it is not worthwhile to pay for an advertisement because the repeat customers will be fewer.

Accepted Answer

A) True 
 B)False

Question 10

In monopolistic competition,firms can have some market power based on the fact that

Accepted Answer

A)  they are large in size. 
B)  there are barriers to entry. 
C)  there is only one firm in the industry. 
D)  they produce differentiated goods. 
A)  they are large in size. 
B)  there are barriers to entry. 
C)  there is only one firm in the industry. 
D)  they produce differentiated goods.

Question 11

In the short run in monopolistic competition there can be

Accepted Answer

A)  economic profits, but not losses. 
B)  economic profits, losses, or the firm can break even. 
C)  no economic profits, but there can be losses 
D)  no economic profits or losses. 
A)  economic profits, but not losses. 
B)  economic profits, losses, or the firm can break even. 
C)  no economic profits, but there can be losses 
D)  no economic profits or losses.

Question 12

Which of the following is a characteristic of monopolistic competition?

Accepted Answer

A)  Many firms compete for essentially the same customers, but each firm produces a slightly different product. 
B)  Competitors have some price-setting power but it is limited because of the many close substitutes available. 
C)  Entry is relatively inexpensive. 
D)  all of the above 
A)  Many firms compete for essentially the same customers, but each firm produces a slightly different product. 
B)  Competitors have some price-setting power but it is limited because of the many close substitutes available. 
C)  Entry is relatively inexpensive. 
D)  all of the above

Question 13

Since a firm in monopolistic competition has some market power,its long-run price will be greater than its

Accepted Answer

A)  average total cost. 
B)  marginal cost. 
C)  total cost. 
D)  none of the above 
A)  average total cost. 
B)  marginal cost. 
C)  total cost. 
D)  none of the above

Question 14

-Refer to Figure 11.1.If Trollio's T-shirts is in long-run equilibrium it is producing ________ silk-screened T-shirts and selling each T-shirt at a price of ________.

Accepted Answer

A)  20; $5 
B)  50; $10 
C)  50; $16 
D)  60; $15 
A)  20; $5 
B)  50; $10 
C)  50; $16 
D)  60; $15

Question 15

Firms in monopolistic competition sell their products at a price equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 16

The toothpaste industry with 5 firms is monopolistically competitive.If a sixth firm decides to entry the market,what will happen to firms' specific demand curves?

Accepted Answer

A)  shift to the right 
B)  shift to the left 
C)  stay the same 
D)  none of the above 
A)  shift to the right 
B)  shift to the left 
C)  stay the same 
D)  none of the above

Question 17

As new firms enter an industry,the price being charged will increase.

Accepted Answer

A) True 
 B)False

Question 18

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are

Accepted Answer

A)  large relative to the market. 
B)  price takers. 
C)  able to block the entry of other firms. 
D)  able to differentiate their product. 
A)  large relative to the market. 
B)  price takers. 
C)  able to block the entry of other firms. 
D)  able to differentiate their product.

Question 19

In long-run equilibrium,a monopolistically competitive firm's price is equal to its marginal cost.

Accepted Answer

A) True 
 B)False

Question 20

In a monopolistically competitive market,price will be equal to minimum average total cost in the long run.

Accepted Answer

A) True 
 B)False

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

Empirical studies have shown that entry leads to lower prices and profit.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would produce ________ units.

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

If firms in a monopolistically competitive industry are earning economic profits,then in the long run

In monopolistic competition,the firm can increase price and still sell some output because

In a monopolistically competitive industry,there are many firms because

Monopolistically competitive firms achieve the degree of market power they command through

If a product is an inferior product,it is not worthwhile to pay for an advertisement because the repeat customers will be fewer.

In monopolistic competition,firms can have some market power based on the fact that

In the short run in monopolistic competition there can be

Which of the following is a characteristic of monopolistic competition?

Since a firm in monopolistic competition has some market power,its long-run price will be greater than its

-Refer to Figure 11.1.If Trollio's T-shirts is in long-run equilibrium it is producing silk-screened T-shirts and selling each T-shirt at a price of .

Firms in monopolistic competition sell their products at a price equal to marginal cost.

The toothpaste industry with 5 firms is monopolistically competitive.If a sixth firm decides to entry the market,what will happen to firms' specific demand curves?

As new firms enter an industry,the price being charged will increase.

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are

In long-run equilibrium,a monopolistically competitive firm's price is equal to its marginal cost.

In a monopolistically competitive market,price will be equal to minimum average total cost 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

If product differentiation continues to diminish,the firm's demand curve becomes more elastic.

Empirical studies have shown that entry leads to lower prices and profit.

-Refer to Figure 11.2.In the long run,the monopolistic competitor would produce ________ units.

On South Street in Philadelphia,there are many Italian restaurants.Each Italian restaurant carries a slightly different menu.In what type of market structure do these Italian restaurants belong?

If firms in a monopolistically competitive industry are earning economic profits,then in the long run

In monopolistic competition,the firm can increase price and still sell some output because

In a monopolistically competitive industry,there are many firms because

Monopolistically competitive firms achieve the degree of market power they command through

If a product is an inferior product,it is not worthwhile to pay for an advertisement because the repeat customers will be fewer.

In monopolistic competition,firms can have some market power based on the fact that

In the short run in monopolistic competition there can be

Which of the following is a characteristic of monopolistic competition?

Since a firm in monopolistic competition has some market power,its long-run price will be greater than its

-Refer to Figure 11.1.If Trollio's T-shirts is in long-run equilibrium it is producing ________ silk-screened T-shirts and selling each T-shirt at a price of ________.

Firms in monopolistic competition sell their products at a price equal to marginal cost.

The toothpaste industry with 5 firms is monopolistically competitive.If a sixth firm decides to entry the market,what will happen to firms' specific demand curves?

As new firms enter an industry,the price being charged will increase.

The feature that distinguishes monopolistic competition from perfect competition is that monopolistically competitive firms are

In long-run equilibrium,a monopolistically competitive firm's price is equal to its marginal cost.

In a monopolistically competitive market,price will be equal to minimum average total cost 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

-Refer to Figure 11.1.If Trollio's T-shirts is in long-run equilibrium it is producing silk-screened T-shirts and selling each T-shirt at a price of .