Question 1

One difference between perfect competition and monopolistic competition is that

Accepted Answer

A)  a perfectly competitive industry has fewer firms. 
B)  in perfect competition, firms produce slightly differentiated products. 
C)  monopolistic competition has barriers to entry. 
D)  firms in monopolistic competition face a downward-sloping demand curve. 
A)  a perfectly competitive industry has fewer firms. 
B)  in perfect competition, firms produce slightly differentiated products. 
C)  monopolistic competition has barriers to entry. 
D)  firms in monopolistic competition face a downward-sloping demand curve.

Question 2

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

Accepted Answer

To determine the quantity produced, the

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 profit-maximizing price?

Accepted Answer

A)  $12 
B)  $10 
C)  $8 
D)  $4 
A)  $12 
B)  $10 
C)  $8 
D)  $4

Question 4

Firms in monopolistic competition charge prices that are ________ those of the other firms in the market.

Accepted Answer

A)  close to 
B)  very different from 
C)  the same as 
D)  completely unrelated to 
A)  close to 
B)  very different from 
C)  the same as 
D)  completely unrelated to

Question 5

In monopolistic competition, each firm supplies a ________ part of the total market output and its actions ________ the actions of the other firms.

Accepted Answer

A)  small; do not directly affect 
B)  small; directly affect 
C)  large; do not directly affect 
D)  large; directly affect 
A)  small; do not directly affect 
B)  small; directly affect 
C)  large; do not directly affect 
D)  large; directly affect

Question 6

In monopolistic competition, product improvement and development

Accepted Answer

A)  are valued by the consumer at an amount equal to the costs the producers have incurred. 
B)  yields a marginal benefit to the producer equal to price of the good. 
C)  is less than its efficient amount. 
D)  None of the above answers are correct. 
A)  are valued by the consumer at an amount equal to the costs the producers have incurred. 
B)  yields a marginal benefit to the producer equal to price of the good. 
C)  is less than its efficient amount. 
D)  None of the above answers are correct.

Question 7

A firm has excess capacity if its output is

Accepted Answer

A)  less than the quantity at which marginal cost is minimized. 
B)  less than the quantity at which economic profit is maximized. 
C)  less than the quantity at which average total cost is minimized. 
D)  more than the quantity at which average total cost is minimized. 
A)  less than the quantity at which marginal cost is minimized. 
B)  less than the quantity at which economic profit is maximized. 
C)  less than the quantity at which average total cost is minimized. 
D)  more than the quantity at which average total cost is minimized.

Question 8

-In the figure above, assuming that the firm does not shut down, it will charge a price of

Accepted Answer

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

Question 9

When firms in monopolistic competition are making an economic profit, firms will

Accepted Answer

A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms.

Question 10

In the scenario above, as a result of increased advertising, Talbot's markup

Accepted Answer

A)  decreases by $100. 
B)  increases by $50. 
C)  increases by $75. 
D)  decreases by $60. 
A)  decreases by $100. 
B)  increases by $50. 
C)  increases by $75. 
D)  decreases by $60.

Question 11

Monopolistic competition is a market structure in which

Accepted Answer

A)  a large number of firms compete. 
B)  each firm produces an identical product. 
C)  firms only compete on product price. 
D)  there are barriers to entry. 
A)  a large number of firms compete. 
B)  each firm produces an identical product. 
C)  firms only compete on product price. 
D)  there are barriers to entry.

Question 12

Monopolistic competition is a market structure in which

Accepted Answer

A)  a large number of firms compete. 
B)  firms produce identical products. 
C)  firms compete only on product price. 
D)  natural or legal barriers prevent the entry of new firms. 
A)  a large number of firms compete. 
B)  firms produce identical products. 
C)  firms compete only on product price. 
D)  natural or legal barriers prevent the entry of new firms.

Question 13

In monopolistic competition, there are

Accepted Answer

A)  many firms making a differentiated product. 
B)  a few firms making a differentiated product. 
C)  many firms making an identical product. 
D)  a few firms making an identical product. 
A)  many firms making a differentiated product. 
B)  a few firms making a differentiated product. 
C)  many firms making an identical product. 
D)  a few firms making an identical product.

Question 14

-The firm in the figure above is in monopolistic competition. It will produce

Accepted Answer

A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units. 
A)  10 units. 
B)  20 units. 
C)  30 units. 
D)  40 units.

Question 15

A monopolistically competitive industry has

Accepted Answer

A)  significant barriers to entry. 
B)  differentiated products. 
C)  mutually dependent firms. 
D)  a small number of large firms. 
A)  significant barriers to entry. 
B)  differentiated products. 
C)  mutually dependent firms. 
D)  a small number of large firms.

Question 16

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)  There are barriers to entry. 
C)  Price exceeds average total cost. 
D)  Marginal revenue is less than marginal cost. 
A)  The firm's economic profit equals zero. 
B)  There are barriers to entry. 
C)  Price exceeds average total cost. 
D)  Marginal revenue is less than marginal cost.

Question 17

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

Accepted Answer

A)  producing 8 units and charging a price of $5. 
B)  producing 8 units and charging a price of $15. 
C)  producing 16 units and charging a price of $10. 
D)  producing 20 units and charging a price of $25. 
A)  producing 8 units and charging a price of $5. 
B)  producing 8 units and charging a price of $15. 
C)  producing 16 units and charging a price of $10. 
D)  producing 20 units and charging a price of $25.

Question 18

In the scenario above, as a result of increased advertising, Talbot's average total cost

Accepted Answer

A)  falls by $20 per coat. 
B)  rises by $50 per coat. 
C)  rises by $30 per coat. 
D)  falls by $40 per coat. 
A)  falls by $20 per coat. 
B)  rises by $50 per coat. 
C)  rises by $30 per coat. 
D)  falls by $40 per coat.

Question 19

Which of the following four firms would most likely be part of a monopolistically competitive market?

Accepted Answer

A)  Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, and Wrangler are all producers of jeans. 
B)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
C)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
D)  Amara Massage is the only firm which specializes in pre- and post-natal massage. 
A)  Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, and Wrangler are all producers of jeans. 
B)  Mark sells the tomatoes he grew in his backyard at the local farmers market. 
C)  The WaveHouse is the only place in San Diego where you can ride an indoor 10 foot wave. 
D)  Amara Massage is the only firm which specializes in pre- and post-natal massage.

Question 20

In the long run, firms in monopolistic competition become price takers.

Accepted Answer

A) True 
 B)False

One difference between perfect competition and monopolistic competition is that

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

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

Firms in monopolistic competition charge prices that are ________ those of the other firms in the market.

In monopolistic competition, each firm supplies a part of the total market output and its actions the actions of the other firms.

In monopolistic competition, product improvement and development

A firm has excess capacity if its output is

-In the figure above, assuming that the firm does not shut down, it will charge a price of

When firms in monopolistic competition are making an economic profit, firms will

In the scenario above, as a result of increased advertising, Talbot's markup

Monopolistic competition is a market structure in which

Monopolistic competition is a market structure in which

In monopolistic competition, there are

-The firm in the figure above is in monopolistic competition. It will produce

A monopolistically competitive industry has

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

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

In the scenario above, as a result of increased advertising, Talbot's average total cost

Which of the following four firms would most likely be part of a monopolistically competitive market?

In the long run, firms in monopolistic competition become price takers.

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

One difference between perfect competition and monopolistic competition is that

-The demand and cost schedules for a firm in monopolistic competition are in the above tables. What is the profit-maximizing level of output and price? What amount of profit is the firm earning? Is this firm in a short-run or long-run equilibrium? Why?

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

Firms in monopolistic competition charge prices that are ________ those of the other firms in the market.

In monopolistic competition, each firm supplies a ________ part of the total market output and its actions ________ the actions of the other firms.

In monopolistic competition, product improvement and development

A firm has excess capacity if its output is

-In the figure above, assuming that the firm does not shut down, it will charge a price of

When firms in monopolistic competition are making an economic profit, firms will

In the scenario above, as a result of increased advertising, Talbot's markup

Monopolistic competition is a market structure in which

Monopolistic competition is a market structure in which

In monopolistic competition, there are

-The firm in the figure above is in monopolistic competition. It will produce

A monopolistically competitive industry has

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

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

In the scenario above, as a result of increased advertising, Talbot's average total cost

Which of the following four firms would most likely be part of a monopolistically competitive market?

In the long run, firms in monopolistic competition become price takers.

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 supplies a part of the total market output and its actions the actions of the other firms.