Question 1

In monopolistic competition, firms can make an economic profit in

Accepted Answer

A)  the short run and in the long run. 
B)  the short run but not in the long run. 
C)  the long run but not in the short run. 
D)  neither the long run nor the short run. 
A)  the short run and in the long run. 
B)  the short run but not in the long run. 
C)  the long run but not in the short run. 
D)  neither the long run nor the short run.

Question 2

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Accepted Answer

A)  The firm's economic profit equals zero. 
B)  Marginal revenue equals marginal cost. 
C)  Price exceeds marginal cost. 
D)  All of the above are true. 
A)  The firm's economic profit equals zero. 
B)  Marginal revenue equals marginal cost. 
C)  Price exceeds marginal cost. 
D)  All of the above are true.

Question 3

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

Accepted Answer

A) True 
 B)False

Question 4

Freedom of entry and exit in monopolistic competition

Accepted Answer

A)  means that firms' price and average total cost of producing are always equal. 
B)  never allows firms to earn economic profits. 
C)  leads to falling prices when new firms enter the market. 
D)  forces firms to abandon product differentiation but only in the long run. 
A)  means that firms' price and average total cost of producing are always equal. 
B)  never allows firms to earn economic profits. 
C)  leads to falling prices when new firms enter the market. 
D)  forces firms to abandon product differentiation but only in the long run.

Question 5

Firms in monopolistic competition always will

Accepted Answer

A)  make an economic profit. 
B)  set their price equal to their marginal cost. 
C)  set their price above their marginal cost. 
D)  produce at the minimum average total cost. 
A)  make an economic profit. 
B)  set their price equal to their marginal cost. 
C)  set their price above their marginal cost. 
D)  produce at the minimum average total cost.

Question 6

Which of the following is NOT a characteristic of monopolistic competition?

Accepted Answer

A)  There is easy entry and exit. 
B)  Firms may make an economic profit in the short run. 
C)  There is product differentiation in the market. 
D)  Firms set the price of their product equal to their marginal cost. 
A)  There is easy entry and exit. 
B)  Firms may make an economic profit in the short run. 
C)  There is product differentiation in the market. 
D)  Firms set the price of their product equal to their marginal cost.

Question 7

In monopolistic competition, firms sell a differentiated product. In perfect competition, firms sell an identical product. How do these markets differ as a result?

Accepted Answer

Because of this difference, firms in mon

Question 8

The profit maximizing condition for a firm in monopolistic competition is to produce so that

Accepted Answer

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

Question 9

-The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to

Accepted Answer

A)  0 units per day. 
B)  4 units per day. 
C)  8 units per day. 
D)  16 units per day. 
A)  0 units per day. 
B)  4 units per day. 
C)  8 units per day. 
D)  16 units per day.

Question 10

In the long run, firms in monopolistic competition have excess capacity.

Accepted Answer

A) True 
 B)False

Question 11

In the short run, a firm in monopolistic competition produces where

Accepted Answer

A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC. 
A)  MR = MC and economic profit is equal to zero. 
B)  MR = MC. 
C)  the given market price is equal to MC and economic profit is equal to zero. 
D)  the given market price is equal to MC.

Question 12

In the long run, monopolistically competitive firms make zero economic profit because of

Accepted Answer

A)  excess capacity. 
B)  product variety. 
C)  easy entry and exit. 
D)  government regulation. 
A)  excess capacity. 
B)  product variety. 
C)  easy entry and exit. 
D)  government regulation.

Question 13

Firms in monopolistic competition make products that are

Accepted Answer

A)  perfect complements. 
B)  close but not perfect complements. 
C)  perfect substitutes. 
D)  close but not perfect substitutes. 
A)  perfect complements. 
B)  close but not perfect complements. 
C)  perfect substitutes. 
D)  close but not perfect substitutes.

Question 14

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Accepted Answer

The efficient scale of output is the lev

Question 15

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the short run, Globe could I. make an economic profit.
II) make zero economic profit.
III) incur an economic loss.

Accepted Answer

A)  Only I 
B)  Only II 
C)  I, II, and III 
D)  Only I and II 
A)  Only I 
B)  Only II 
C)  I, II, and III 
D)  Only I and II

Question 16

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).
-In the figure above, what is Gap's excess capacity?

Accepted Answer

A)  32 jackets per day 
B)  zero 
C)  4 jackets per day 
D)  132 jackets per day 
A)  32 jackets per day 
B)  zero 
C)  4 jackets per day 
D)  132 jackets per day

Question 17

-In the above figure, the firm is a monopolistically competitive firm. In the long run, its economic profit will be

Accepted Answer

A)  zero. 
B)  between zero and $50 per day. 
C)  greater than $50 per day. 
D)  some amount that cannot be determined without more information. 
A)  zero. 
B)  between zero and $50 per day. 
C)  greater than $50 per day. 
D)  some amount that cannot be determined without more information.

Question 18

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Accepted Answer

A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases 
A)  leftward; leftward; decreases 
B)  rightward; leftward; increases 
C)  leftward; rightward; decreases 
D)  leftward; leftward; increases

Question 19

Product differentiation is a defining characteristic of

Accepted Answer

A)  perfectly elastic demand. 
B)  oligopoly. 
C)  perfect competition. 
D)  monopolistic competition. 
A)  perfectly elastic demand. 
B)  oligopoly. 
C)  perfect competition. 
D)  monopolistic competition.

In monopolistic competition, firms can make an economic profit in

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

Freedom of entry and exit in monopolistic competition

Firms in monopolistic competition always will

Which of the following is NOT a characteristic of monopolistic competition?

In monopolistic competition, firms sell a differentiated product. In perfect competition, firms sell an identical product. How do these markets differ as a result?

The profit maximizing condition for a firm in monopolistic competition is to produce so that

-The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to

In the long run, firms in monopolistic competition have excess capacity.

In the short run, a firm in monopolistic competition produces where

In the long run, monopolistically competitive firms make zero economic profit because of

Firms in monopolistic competition make products that are

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the short run, Globe could I. make an economic profit. II) make zero economic profit. III) incur an economic loss.

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, what is Gap's excess capacity?

-In the above figure, the firm is a monopolistically competitive firm. In the long run, its economic profit will be

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts , the marginal curve shifts , and the profit-maximizing quantity .

Product differentiation is a defining characteristic of

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 14: Monopolistic Competition

In monopolistic competition, firms can make an economic profit in

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Firms in monopolistic competition maximize their profit by setting their price equal to their marginal revenue.

Freedom of entry and exit in monopolistic competition

Firms in monopolistic competition always will

Which of the following is NOT a characteristic of monopolistic competition?

In monopolistic competition, firms sell a differentiated product. In perfect competition, firms sell an identical product. How do these markets differ as a result?

The profit maximizing condition for a firm in monopolistic competition is to produce so that

-The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to

In the long run, firms in monopolistic competition have excess capacity.

In the short run, a firm in monopolistic competition produces where

In the long run, monopolistically competitive firms make zero economic profit because of

Firms in monopolistic competition make products that are

What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the short run, Globe could I. make an economic profit. II) make zero economic profit. III) incur an economic loss.

The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). -In the figure above, what is Gap's excess capacity?

-In the above figure, the firm is a monopolistically competitive firm. In the long run, its economic profit will be

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Product differentiation is a defining characteristic of

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts , the marginal curve shifts , and the profit-maximizing quantity .