Exam 11: Market Entry and Monopolistic Competition

Assume that there is a single firm producing toilet paper and the firm's demand curve is the same as the market demand curve.If a second firm that also produces toilet paper enters the market,what will happen to the demand curve of the original firm?

-In the long run,the monopolistically competitive firm in Figure 11.3 would earn ________ of economic profit.

As new firms enter a monopolistically competitive market,there is more product variety and lower prices.

Describe two features of monopolistic competition that differentiate it from monopoly.

Provide four examples of goods that are sold in monopolistically competitive markets.

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

As new firms enter a monopolistically competitive market,existing firms will face a lower average cost of production because the cost is spread across more firms.

-In the long run,the monopolistically competitive firm in Figure 11.3 would generate ________ of total revenue.

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 consumers who accepted a particular loan offer from the mass mailings

In a monopolistically competitive market,product differentiation ensures that in the long run

Using celebrities and other expensive advertising to advertise a product can signal consumers that the producer expects few repeat customers.

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