Question 1

In the long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit.

Accepted Answer

A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot

Question 2

Firms in monopolistic competition have rivals that

Accepted Answer

A)  match their price increases. 
B)  match their price decreases. 
C)  agree on a common price. 
D)  set their prices according to the demand curves they face. 
A)  match their price increases. 
B)  match their price decreases. 
C)  agree on a common price. 
D)  set their prices according to the demand curves they face.

Question 3

In monopolistically competitive industries

Accepted Answer

A)  entry and exit push economic profits toward zero. 
B)  there is no diversity of products. 
C)  firms do not respond to changes in demand. 
D)  firms produce where marginal cost equals the marginal benefit to the consumers. 
A)  entry and exit push economic profits toward zero. 
B)  there is no diversity of products. 
C)  firms do not respond to changes in demand. 
D)  firms produce where marginal cost equals the marginal benefit to the consumers.

Question 4

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

Accepted Answer

The firm produces where its marginal cos

Question 5

Product variety and information for consumers are gains from

Accepted Answer

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

Question 6

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market?

Accepted Answer

A)  The number of firms will increase, decreasing La Super Rica's demand. 
B)  The number of firms will decrease, decreasing La Super Rica's demand. 
C)  The number of firms will increase, increasing La Super Rica's demand. 
D)  The number of firms will decrease, increasing La Super Rica's demand. 
A)  The number of firms will increase, decreasing La Super Rica's demand. 
B)  The number of firms will decrease, decreasing La Super Rica's demand. 
C)  The number of firms will increase, increasing La Super Rica's demand. 
D)  The number of firms will decrease, increasing La Super Rica's demand.

Question 7

In the long run, all firms in a monopolistically competitive industry make

Accepted Answer

A)  negative accounting profit. 
B)  zero accounting profit. 
C)  an economic profit. 
D)  zero economic profit. 
A)  negative accounting profit. 
B)  zero accounting profit. 
C)  an economic profit. 
D)  zero economic profit.

Question 8

Advertising costs of a monopolistically competitive firm are ________.

Accepted Answer

A)  greater than a monopoly and the same as a perfectly competitive firm 
B)  greater than a perfectly competitive firm 
C)  less than a perfectly competitive firm 
D)  the same as a monopoly 
A)  greater than a monopoly and the same as a perfectly competitive firm 
B)  greater than a perfectly competitive firm 
C)  less than a perfectly competitive firm 
D)  the same as a monopoly

Question 9

Which of the following is a characteristic of monopolistic competition?

Accepted Answer

A)  many firms 
B)  standardized product 
C)  mutual interdependence 
D)  barriers to entry 
A)  many firms 
B)  standardized product 
C)  mutual interdependence 
D)  barriers to entry

Question 10

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Accepted Answer

A)  increase production. 
B)  decrease production. 
C)  not change its production because it is maximizing its profit. 
D)  Not enough information is given to determine what La Super Rica should do. 
A)  increase production. 
B)  decrease production. 
C)  not change its production because it is maximizing its profit. 
D)  Not enough information is given to determine what La Super Rica should do.

Question 11

In monopolistic competition, in the long run firms produce

Accepted Answer

A)  less output than that which minimizes their ATC. 
B)  more output than that which minimizes their ATC. 
C)  the amount of output that minimizes their ATC and their AVC. 
D)  the amount of output that minimizes their ATC but not their AVC. 
A)  less output than that which minimizes their ATC. 
B)  more output than that which minimizes their ATC. 
C)  the amount of output that minimizes their ATC and their AVC. 
D)  the amount of output that minimizes their ATC but not their AVC.

Question 12

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

Accepted Answer

A)  produce more output at a higher price. 
B)  produce less output at a lower price. 
C)  produce the same quantity at the same price. 
D)  Any of the above are possible. 
A)  produce more output at a higher price. 
B)  produce less output at a lower price. 
C)  produce the same quantity at the same price. 
D)  Any of the above are possible.

Question 13

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm earns total revenue of

Accepted Answer

A)  $120. 
B)  $40. 
C)  $160. 
D)  $0. 
A)  $120. 
B)  $40. 
C)  $160. 
D)  $0.

Question 14

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 15

-In the above figure, if the firm is in monopolistic competition, its price will be

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 16

Monopolistic competition is a market in which ________ firms produce ________ goods and services.

Accepted Answer

A)  many; identical 
B)  many; differentiated 
C)  few; differentiated 
D)  few; identical 
A)  many; identical 
B)  many; differentiated 
C)  few; differentiated 
D)  few; identical

Question 17

A characteristic of monopolistic competition is

Accepted Answer

A)  there is one firm in the industry. 
B)  each firm is a price taker. 
C)  each firm produces a differentiated product. 
D)  the actions of one firm affect the choices and actions of another firm. 
A)  there is one firm in the industry. 
B)  each firm is a price taker. 
C)  each firm produces a differentiated product. 
D)  the actions of one firm affect the choices and actions of another firm.

Question 18

A monopolistically competitive firm and a perfectly competitive firm are alike because both types of firms I. face downward sloping demand curves.
II) have marginal revenue curves that lie beneath their demand curves.
III) can make only zero economic profit in the long run.

Accepted Answer

A)  I and II 
B)  I and III 
C)  III only 
D)  I only 
A)  I and II 
B)  I and III 
C)  III only 
D)  I only

Question 19

In the long run, a firm in a monopolistically competitive industry produces where its marginal cost

Accepted Answer

A)  is less than its average cost. 
B)  equals its average cost. 
C)  exceeds its average cost. 
D)  equals its price. 
A)  is less than its average cost. 
B)  equals its average cost. 
C)  exceeds its average cost. 
D)  equals its price.

Question 20

-The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximizes its profit by

Accepted Answer

A)  producing 4 units and charging a price of $15. 
B)  producing 8 units and charging a price of $5. 
C)  producing 16 units and charging a price of $10. 
D)  None of the above answers is correct. 
A)  producing 4 units and charging a price of $15. 
B)  producing 8 units and charging a price of $5. 
C)  producing 16 units and charging a price of $10. 
D)  None of the above answers is correct.

In the long run, a monopolistically competitive firm make an economic profit and a monopoly make an economic profit.

Firms in monopolistic competition have rivals that

In monopolistically competitive industries

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

Product variety and information for consumers are gains from

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market?

In the long run, all firms in a monopolistically competitive industry make

Advertising costs of a monopolistically competitive firm are ________.

Which of the following is a characteristic of monopolistic competition?

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

In monopolistic competition, in the long run firms produce

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm earns total revenue of

How do product development and marketing affect a firm in monopolistic competition?

-In the above figure, if the firm is in monopolistic competition, its price will be

Monopolistic competition is a market in which firms produce goods and services.

A characteristic of monopolistic competition is

A monopolistically competitive firm and a perfectly competitive firm are alike because both types of firms I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make only zero economic profit in the long run.

In the long run, a firm in a monopolistically competitive industry produces where its marginal cost

-The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximizes its profit by

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 long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit.

Firms in monopolistic competition have rivals that

In monopolistically competitive industries

How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?

Product variety and information for consumers are gains from

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market?

In the long run, all firms in a monopolistically competitive industry make

Advertising costs of a monopolistically competitive firm are ________.

Which of the following is a characteristic of monopolistic competition?

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

In monopolistic competition, in the long run firms produce

-In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will

-The above figure shows the demand and cost curves for a firm in monopolistic competition. The firm earns total revenue of

How do product development and marketing affect a firm in monopolistic competition?

-In the above figure, if the firm is in monopolistic competition, its price will be

Monopolistic competition is a market in which ________ firms produce ________ goods and services.

A characteristic of monopolistic competition is

A monopolistically competitive firm and a perfectly competitive firm are alike because both types of firms I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make only zero economic profit in the long run.

In the long run, a firm in a monopolistically competitive industry produces where its marginal cost

-The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximizes its profit by

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 the long run, a monopolistically competitive firm make an economic profit and a monopoly make an economic profit.

Monopolistic competition is a market in which firms produce goods and services.