Question 1

Stephanie has just placed an order for the latest video after she received a personalized e-mail. The e-mail is an example of

Accepted Answer

A)  mass marketing. 
B)  direct marketing. 
C)  indirect marketing. 
D)  interactive marketing. 
A)  mass marketing. 
B)  direct marketing. 
C)  indirect marketing. 
D)  interactive marketing.

Question 2

What are the implications of there being a large number of firms in a monopolistically competitive market?

Accepted Answer

A large number of firms has three implic

Question 3

Which of the following is most likely to be a monopolistically competitive firm?

Accepted Answer

A)  a soybean farmer 
B)  a lettuce farmer 
C)  a municipal water district 
D)  a fast food restaurant 
A)  a soybean farmer 
B)  a lettuce farmer 
C)  a municipal water district 
D)  a fast food restaurant

Question 4

Typically a mix of informational and persuasive advertising is used for

Accepted Answer

A)  experience goods. 
B)  credence goods. 
C)  credible goods. 
D)  search goods. 
A)  experience goods. 
B)  credence goods. 
C)  credible goods. 
D)  search goods.

Question 5

In a monopolistically competitive market, the consumer receives the benefit of

Accepted Answer

A)  production at minimum average cost. 
B)  production where price equals marginal cost. 
C)  product diversity. 
D)  allocative efficiency. 
A)  production at minimum average cost. 
B)  production where price equals marginal cost. 
C)  product diversity. 
D)  allocative efficiency.

Question 6

Average fixed cost for an information product would

Accepted Answer

A)  first decrease and then increase as quantity increases. 
B)  increase constantly as quantity increases. 
C)  decrease constantly as quantity increases. 
D)  remain constant as quantity increases. 
A)  first decrease and then increase as quantity increases. 
B)  increase constantly as quantity increases. 
C)  decrease constantly as quantity increases. 
D)  remain constant as quantity increases.

Question 7

A monopolistic competitor finds its profit-maximizing rate of output by

Accepted Answer

A)  equating the marginal revenue from advertising with the marginal revenue from selling the good. 
B)  setting average revenue equal to average total cost. 
C)  equating marginal revenue and marginal cost. 
D)  equating price and marginal revenue. 
A)  equating the marginal revenue from advertising with the marginal revenue from selling the good. 
B)  setting average revenue equal to average total cost. 
C)  equating marginal revenue and marginal cost. 
D)  equating price and marginal revenue.

Question 8

Average total cost for an information product would

Accepted Answer

A)  first decrease and then increase as quantity increases. 
B)  increase constantly as quantity increases. 
C)  decrease constantly as quantity increases. 
D)  remain constant as quantity increases. 
A)  first decrease and then increase as quantity increases. 
B)  increase constantly as quantity increases. 
C)  decrease constantly as quantity increases. 
D)  remain constant as quantity increases.

Question 9

-Refer to the above figure. The figure shows the cost structure of a firm producing an information product. Which curve would represent the marginal cost for an information product?

Accepted Answer

A)  Curve 1 
B)  Curve 2 
C)  Curve 3 
D)  none of the above 
A)  Curve 1 
B)  Curve 2 
C)  Curve 3 
D)  none of the above

Question 10

The demand curve for a monopolistically competitive firm is

Accepted Answer

A)  the same as the industry demand curve. 
B)  more elastic than the demand curve of the perfectly competitive firm. 
C)  less elastic than the demand curve of the perfectly competitive firm. 
D)  horizontal. 
A)  the same as the industry demand curve. 
B)  more elastic than the demand curve of the perfectly competitive firm. 
C)  less elastic than the demand curve of the perfectly competitive firm. 
D)  horizontal.

Question 11

Direct marketing is

Accepted Answer

A)  advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders. 
B)  advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. 
C)  advertising targeted at specific consumers. 
D)  advertising intended to reach as many consumers as possible. 
A)  advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders. 
B)  advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. 
C)  advertising targeted at specific consumers. 
D)  advertising intended to reach as many consumers as possible.

Question 12

Why is it that a monopolistically competitive firm cannot earn positive economic profits in the long run?

Accepted Answer

A monopolistically competitive firm can

Question 13

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

Accepted Answer

A)  A large number of sellers in a highly competitive market 
B)  Differentiated products 
C)  The existence of advertising 
D)  Marginal cost pricing in the long run 
A)  A large number of sellers in a highly competitive market 
B)  Differentiated products 
C)  The existence of advertising 
D)  Marginal cost pricing in the long run

Question 14

-In the above figure, total revenue for this profit-maximizing monopolistically competitive firm is

Accepted Answer

A)  $50,000. 
B)  $91,000. 
C)  $96,000. 
D)  $100,000. 
A)  $50,000. 
B)  $91,000. 
C)  $96,000. 
D)  $100,000.

Question 15

The distinguishing of products by brand name, color, and other attributes

Accepted Answer

A)  is known as interdependence. 
B)  is known as product differentiation. 
C)  leads to many firms in the market. 
D)  leads to collusion. 
A)  is known as interdependence. 
B)  is known as product differentiation. 
C)  leads to many firms in the market. 
D)  leads to collusion.

Question 16

The advertisement approach that allows a consumer to follow up directly to an advertising message is known as

Accepted Answer

A)  direct marketing. 
B)  mass marketing. 
C)  indirect marketing. 
D)  interactive marketing. 
A)  direct marketing. 
B)  mass marketing. 
C)  indirect marketing. 
D)  interactive marketing.

Question 17

Which of the following is most likely to be a monopolistically competitive firm?

Accepted Answer

A)  Smart phone producer 
B)  Cell phone service provider 
C)  College textbook publisher 
D)  Computer software maker 
A)  Smart phone producer 
B)  Cell phone service provider 
C)  College textbook publisher 
D)  Computer software maker

Question 18

-Refer to the above figure. Which panel represents the long-run situation for a monopolistically competitive firm?

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D. 
A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 19

-Refer to the above figure. The profit maximizing price for a monopolistic competitor is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
A)    . 
B)    . 
C)    . 
D)    .

Question 20

-Refer to the above figure. Which of the following statements about panel D in the figure is TRUE?

Accepted Answer

A)  The figure represents a long-run equilibrium for a monopolistic competitor. 
B)  The figure represents an industry long-run equilibrium for monopolistic competition. 
C)  The figure is in error since it doesn't show the monopolistic competitor making profits in the long run. 
D)  The figure is in error since it has marginal cost intersecting the ATC curve at a point other than the minimum of ATC. 
A)  The figure represents a long-run equilibrium for a monopolistic competitor. 
B)  The figure represents an industry long-run equilibrium for monopolistic competition. 
C)  The figure is in error since it doesn't show the monopolistic competitor making profits in the long run. 
D)  The figure is in error since it has marginal cost intersecting the ATC curve at a point other than the minimum of ATC.

Exam 25: Monopolistic Competition

Stephanie has just placed an order for the latest video after she received a personalized e-mail. The e-mail is an example of

What are the implications of there being a large number of firms in a monopolistically competitive market?

Which of the following is most likely to be a monopolistically competitive firm?

Typically a mix of informational and persuasive advertising is used for

In a monopolistically competitive market, the consumer receives the benefit of

Average fixed cost for an information product would

A monopolistic competitor finds its profit-maximizing rate of output by

Average total cost for an information product would

-Refer to the above figure. The figure shows the cost structure of a firm producing an information product. Which curve would represent the marginal cost for an information product?

The demand curve for a monopolistically competitive firm is

Direct marketing is

Why is it that a monopolistically competitive firm cannot earn positive economic profits in the long run?

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

-In the above figure, total revenue for this profit-maximizing monopolistically competitive firm is

The distinguishing of products by brand name, color, and other attributes

The advertisement approach that allows a consumer to follow up directly to an advertising message is known as

Which of the following is most likely to be a monopolistically competitive firm?

-Refer to the above figure. Which panel represents the long-run situation for a monopolistically competitive firm?

-Refer to the above figure. The profit maximizing price for a monopolistic competitor is

-Refer to the above figure. Which of the following statements about panel D in the figure is TRUE?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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