Question 1

In the short run, a firm in monopolistic competition produces where P = MC.

Accepted Answer

A) True 
 B)False

Question 2

-In the above figure, the monopolistically competitive firm makes an economic profit of

Accepted Answer

A)  $0. 
B)  between $0 and $50 per day. 
C)  between $50.01 and $100 per day. 
D)  greater than $100.01 per day. 
A)  $0. 
B)  between $0 and $50 per day. 
C)  between $50.01 and $100 per day. 
D)  greater than $100.01 per day.

Question 3

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

Accepted Answer

A)  zero 
B)  between $1 and $700 
C)  between $701 and $900 
D)  more than $901 
A)  zero 
B)  between $1 and $700 
C)  between $701 and $900 
D)  more than $901

Question 4

Monopolistic competition is a market structure in which

Accepted Answer

A)  a small number of firms compete. 
B)  each firm produces an identical product. 
C)  firms compete on product quality, price, and marketing. 
D)  there are barriers to entry. 
A)  a small number of firms compete. 
B)  each firm produces an identical product. 
C)  firms compete on product quality, price, and marketing. 
D)  there are barriers to entry.

Question 5

What is a firm's markup? What does it show?

Accepted Answer

A firm's markup is the amount

Question 6

A firm in monopolistic competition can determine what price to charge for its product because of

Accepted Answer

A)  barriers to entry. 
B)  economies of scale. 
C)  product differentiation. 
D)  the fact there are many buyers. 
A)  barriers to entry. 
B)  economies of scale. 
C)  product differentiation. 
D)  the fact there are many buyers.

Question 7

In long-run equilibrium, a firm in monopolistic competition makes

Accepted Answer

A)  an economic profit but the economic profit is less than it would be if the firm was a monopoly. 
B)  an economic profit that is higher than what it would be if the firm was a monopoly. 
C)  zero economic profit. 
D)  an economic profit that is the same amount as it would be if the firm was a monopoly. 
A)  an economic profit but the economic profit is less than it would be if the firm was a monopoly. 
B)  an economic profit that is higher than what it would be if the firm was a monopoly. 
C)  zero economic profit. 
D)  an economic profit that is the same amount as it would be if the firm was a monopoly.

Question 8

A monopolistically competitive firm can increase its economic profit by ________.

Accepted Answer

A)  developing new products 
B)  producing at the efficient quantity 
C)  eliminating excess capacity 
D)  advertising less 
A)  developing new products 
B)  producing at the efficient quantity 
C)  eliminating excess capacity 
D)  advertising less

Question 9

In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.

Accepted Answer

A)  below; barriers to entry 
B)  below; product differentiation 
C)  above; barriers to entry 
D)  above; product differentiation 
A)  below; barriers to entry 
B)  below; product differentiation 
C)  above; barriers to entry 
D)  above; product differentiation

Question 10

In the long run, a firm in monopolistic competition has its price equal to ________ and also has its price ________.

Accepted Answer

A)  marginal cost; exceeding its average total cost. 
B)  marginal cost; equal to its average total cost 
C)  average total cost; exceeds its marginal cost 
D)  average total cost; less than its marginal cost 
A)  marginal cost; exceeding its average total cost. 
B)  marginal cost; equal to its average total cost 
C)  average total cost; exceeds its marginal cost 
D)  average total cost; less than its marginal cost

Question 11

Which of the following is NOT true of firms in monopolistic competition?

Accepted Answer

A)  They are price takers. 
B)  They practice product differentiation. 
C)  They have excess capacity in the long run. 
D)  They earn a normal profit in the long run. 
A)  They are price takers. 
B)  They practice product differentiation. 
C)  They have excess capacity in the long run. 
D)  They earn a normal profit in the long run.

Question 12

In monopolistic competition, each firm's marginal revenue curve has a ________ and its demand curve has a ________.

Accepted Answer

A)  slope equal to zero; slope equal to zero 
B)  slope equal to zero; negative slope 
C)  negative slope; a slope equal to zero 
D)  negative slope; negative slope 
A)  slope equal to zero; slope equal to zero 
B)  slope equal to zero; negative slope 
C)  negative slope; a slope equal to zero 
D)  negative slope; negative slope

Question 13

In monopolistic competition, firms compete on product quality, price and marketing.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is FALSE concerning monopolistic competition?

Accepted Answer

A)  There are many firms. 
B)  Firms sell a differentiated product. 
C)  Each firm's actions influence rival firms. 
D)  Firms are free to enter and exit. 
A)  There are many firms. 
B)  Firms sell a differentiated product. 
C)  Each firm's actions influence rival firms. 
D)  Firms are free to enter and exit.

Question 15

In the short run, for a firm in monopolistic competition

Accepted Answer

A)  the firm's economic profit must equal zero. 
B)  marginal revenue exceeds marginal cost. 
C)  price exceeds marginal cost. 
D)  the firm is a price taker. 
A)  the firm's economic profit must equal zero. 
B)  marginal revenue exceeds marginal cost. 
C)  price exceeds marginal cost. 
D)  the firm is a price taker.

Question 16

In the long-run, a firm in monopolistic competition has

Accepted Answer

A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price. 
A)  a price that exceeds its average total cost. 
B)  a price that exceeds its marginal cost. 
C)  an average total cost that exceeds its price. 
D)  a marginal cost that exceeds its price.

Question 17

In monopolistic competition, in the long run firms have

Accepted Answer

A)  a capacity shortage. 
B)  excess capacity. 
C)  an economic profit. 
D)  an economic loss. 
A)  a capacity shortage. 
B)  excess capacity. 
C)  an economic profit. 
D)  an economic loss.

Question 18

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's economic profit in the long run is

Accepted Answer

A)  zero. 
B)  $600. 
C)  $900. 
D)  $2,400. 
A)  zero. 
B)  $600. 
C)  $900. 
D)  $2,400.

Question 19

Monopolistic competition differs from monopoly because in monopolistic competition

Accepted Answer

A)  there are many firms. 
B)  there are no close substitutes for each firm's product. 
C)  the firms compete only on price. 
D)  None of the above are differences between monopoly and monopolistically competitive firms. 
A)  there are many firms. 
B)  there are no close substitutes for each firm's product. 
C)  the firms compete only on price. 
D)  None of the above are differences between monopoly and monopolistically competitive firms.

Question 20

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?

Accepted Answer

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

In the short run, a firm in monopolistic competition produces where P = MC.

-In the above figure, the monopolistically competitive firm makes an economic profit of

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

Monopolistic competition is a market structure in which

What is a firm's markup? What does it show?

A firm in monopolistic competition can determine what price to charge for its product because of

In long-run equilibrium, a firm in monopolistic competition makes

A monopolistically competitive firm can increase its economic profit by ________.

In monopolistic competition, each firm's marginal revenue curve lies its demand curve because of .

In the long run, a firm in monopolistic competition has its price equal to and also has its price .

Which of the following is NOT true of firms in monopolistic competition?

In monopolistic competition, each firm's marginal revenue curve has a and its demand curve has a .

In monopolistic competition, firms compete on product quality, price and marketing.

Which of the following statements is FALSE concerning monopolistic competition?

In the short run, for a firm in monopolistic competition

In the long-run, a firm in monopolistic competition has

In monopolistic competition, in the long run firms have

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's economic profit in the long run is

Monopolistic competition differs from monopoly because in monopolistic competition

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?

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 the short run, a firm in monopolistic competition produces where P = MC.

-In the above figure, the monopolistically competitive firm makes an economic profit of

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

Monopolistic competition is a market structure in which

What is a firm's markup? What does it show?

A firm in monopolistic competition can determine what price to charge for its product because of

In long-run equilibrium, a firm in monopolistic competition makes

A monopolistically competitive firm can increase its economic profit by ________.

In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.

In the long run, a firm in monopolistic competition has its price equal to ________ and also has its price ________.

Which of the following is NOT true of firms in monopolistic competition?

In monopolistic competition, each firm's marginal revenue curve has a ________ and its demand curve has a ________.

In monopolistic competition, firms compete on product quality, price and marketing.

Which of the following statements is FALSE concerning monopolistic competition?

In the short run, for a firm in monopolistic competition

In the long-run, a firm in monopolistic competition has

In monopolistic competition, in the long run firms have

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's economic profit in the long run is

Monopolistic competition differs from monopoly because in monopolistic competition

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?

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

In monopolistic competition, each firm's marginal revenue curve lies its demand curve because of .

In the long run, a firm in monopolistic competition has its price equal to and also has its price .

In monopolistic competition, each firm's marginal revenue curve has a and its demand curve has a .