Question 1

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

Accepted Answer

A) True 
 B)False

Question 2

The big advantage to consumers of product differentiation is that it

Accepted Answer

A)  allows for a large number of firms. 
B)  provides variety. 
C)  prevents monopoly. 
D)  improves technology. 
A)  allows for a large number of firms. 
B)  provides variety. 
C)  prevents monopoly. 
D)  improves technology.

Question 3

What is meant by product differentiation? Why is it employed by firms?

Accepted Answer

Product differentiation involves produci

Question 4

What effect does the absence of barriers to entry in a monopolistically competitive industry have on the existing firms' demand and marginal revenue curves?

Accepted Answer

A)  The demand and marginal revenue curves begin to shift to the right. 
B)  The demand curve begins to shift to the right, but the marginal revenue curve shifts to the left. 
C)  Both curves shift to the left. 
D)  The demand curve shifts to the left, but the marginal revenue curve shifts to the right. 
A)  The demand and marginal revenue curves begin to shift to the right. 
B)  The demand curve begins to shift to the right, but the marginal revenue curve shifts to the left. 
C)  Both curves shift to the left. 
D)  The demand curve shifts to the left, but the marginal revenue curve shifts to the right.

Question 5

What encourages firms to enter markets?

Accepted Answer

A)  The diversity of products offered must be small. 
B)  Firms believe they can violate patent protection with impunity. 
C)  No firms in the industry can experience losses. 
D)  Some existing firms in the market must be earning economic profits. 
A)  The diversity of products offered must be small. 
B)  Firms believe they can violate patent protection with impunity. 
C)  No firms in the industry can experience losses. 
D)  Some existing firms in the market must be earning economic profits.

Question 6

Recall the Application about the costs involved in opening a motel to answer the following question(s).
-Recall the Application.Which of the following is NOT required to operate a Motel 6 franchise?

Accepted Answer

A)  paying a franchise fee 
B)  earning an economic profit 
C)  paying a royalty rate on profits 
D)  hotelier skills 
A)  paying a franchise fee 
B)  earning an economic profit 
C)  paying a royalty rate on profits 
D)  hotelier skills

Question 7

A monopolistically competitive firm influences market price by virtue of its size.

Accepted Answer

A) True 
 B)False

Question 8

Recall the Application about a South African consumer lender that offered different interest rates in loan offers via mass mailings to answer the following question(s).
-According to the Application,the number of ________ who accepted a particular loan offer from the mass mailings increased when the offer letter included the picture of a ________.

Accepted Answer

A)  women; man rather than the picture of a woman 
B)  men; woman rather than the picture of a man 
C)  women; woman rather than the picture of a man 
D)  men; man rather than the picture of a woman 
A)  women; man rather than the picture of a woman 
B)  men; woman rather than the picture of a man 
C)  women; woman rather than the picture of a man 
D)  men; man rather than the picture of a woman

Question 9

How is it possible that monopolistically competitive firms have market power and yet cannot earn long-run profit?

Accepted Answer

The market power of monopolistically com

Question 10

Explain the characteristics of monopolistic competition.Explain how price and output are determined in monopolistic competition.

Accepted Answer

The characteristics of monopolistic comp

Question 11

According to the textbook,a famous study of the eyeglass market found that advertising promoted price competition.

Accepted Answer

A) True 
 B)False

Question 12

The demand for a product of a monopolistically competitive firm is

Accepted Answer

A)  price inelastic. 
B)  price elastic. 
C)  unit elastic. 
D)  undefined. 
A)  price inelastic. 
B)  price elastic. 
C)  unit elastic. 
D)  undefined.

Question 13

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

Accepted Answer

A) True 
 B)False

Question 14

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good example of differentiation by location?

Accepted Answer

A)  gas stations 
B)  movie theaters 
C)  music stores 
D)  restaurants 
A)  gas stations 
B)  movie theaters 
C)  music stores 
D)  restaurants

Question 15

Which type of profit-maximizing firm will choose to produce where marginal revenue 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 16

Explain the trade-offs associated with monopolistic competition relative to monopoly.

Accepted Answer

Compared with monopoly,markets that are

Question 17

A profit-maximizing firm in monopolistic competition differs from a profit-maximizing firm in perfect competition because the firm in monopolistic competition

Accepted Answer

A)  faces a perfectly elastic demand curve at the market price. 
B)  faces no barriers to entry. 
C)  faces a downward-sloping demand curve for its product. 
D)  can earn economic profits in the long run. 
A)  faces a perfectly elastic demand curve at the market price. 
B)  faces no barriers to entry. 
C)  faces a downward-sloping demand curve for its product. 
D)  can earn economic profits in the long run.

Question 18

With respect to output production,a monopolistically competitive firm produces

Accepted Answer

A)  a larger amount of output than a perfectly competitive firm. 
B)  an identical amount of output as a perfectly competitive firm. 
C)  a smaller amount of output than a perfectly competitive firm. 
D)  none of the above 
A)  a larger amount of output than a perfectly competitive firm. 
B)  an identical amount of output as a perfectly competitive firm. 
C)  a smaller amount of output than a perfectly competitive firm. 
D)  none of the above

Question 19

A monopolistically competitive market is characterized by

Accepted Answer

A)  many firms that sell slightly different products. 
B)  many barriers to entry and few firms. 
C)  many firms that sell the same products. 
D)  few firms that sell the same products. 
A)  many firms that sell slightly different products. 
B)  many barriers to entry and few firms. 
C)  many firms that sell the same products. 
D)  few firms that sell the same products.

Question 20

The main purpose of advertising is to make a product appealing.

Accepted Answer

A) True 
 B)False

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

The big advantage to consumers of product differentiation is that it

What is meant by product differentiation? Why is it employed by firms?

What effect does the absence of barriers to entry in a monopolistically competitive industry have on the existing firms' demand and marginal revenue curves?

What encourages firms to enter markets?

Recall the Application about the costs involved in opening a motel to answer the following question(s). -Recall the Application.Which of the following is NOT required to operate a Motel 6 franchise?

A monopolistically competitive firm influences market price by virtue of its size.

How is it possible that monopolistically competitive firms have market power and yet cannot earn long-run profit?

Explain the characteristics of monopolistic competition.Explain how price and output are determined in monopolistic competition.

According to the textbook,a famous study of the eyeglass market found that advertising promoted price competition.

The demand for a product of a monopolistically competitive firm is

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good example of differentiation by location?

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

Explain the trade-offs associated with monopolistic competition relative to monopoly.

A profit-maximizing firm in monopolistic competition differs from a profit-maximizing firm in perfect competition because the firm in monopolistic competition

With respect to output production,a monopolistically competitive firm produces

A monopolistically competitive market is characterized by

The main purpose of advertising is to make a product appealing.

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

Firms in a monopolistically competitive industry have small economies of scale which causes no barriers to entry.

The big advantage to consumers of product differentiation is that it

What is meant by product differentiation? Why is it employed by firms?

What effect does the absence of barriers to entry in a monopolistically competitive industry have on the existing firms' demand and marginal revenue curves?

What encourages firms to enter markets?

Recall the Application about the costs involved in opening a motel to answer the following question(s). -Recall the Application.Which of the following is NOT required to operate a Motel 6 franchise?

A monopolistically competitive firm influences market price by virtue of its size.

How is it possible that monopolistically competitive firms have market power and yet cannot earn long-run profit?

Explain the characteristics of monopolistic competition.Explain how price and output are determined in monopolistic competition.

According to the textbook,a famous study of the eyeglass market found that advertising promoted price competition.

The demand for a product of a monopolistically competitive firm is

A monopolistically competitive firm maximizes profit by producing where marginal revenue is less than marginal cost.

In some monopolistically competitive markets,differentiation is obtained simply by location.Which of the followings is NOT a good example of differentiation by location?

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

Explain the trade-offs associated with monopolistic competition relative to monopoly.

A profit-maximizing firm in monopolistic competition differs from a profit-maximizing firm in perfect competition because the firm in monopolistic competition

With respect to output production,a monopolistically competitive firm produces

A monopolistically competitive market is characterized by

The main purpose of advertising is to make a product appealing.

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