Question 1

Which of the following is most likely sold in a monopolistically competitive market?

Accepted Answer

A)  sports drinks 
B)  cable TV programming 
C)  a share of McDonald's stock 
D)  sunglasses 
A)  sports drinks 
B)  cable TV programming 
C)  a share of McDonald's stock 
D)  sunglasses

Question 2

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20.
  
-Refer to Table 16-7. If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is correct?

Accepted Answer

A)  This firm is operating at its efficient scale. 
B)  This firm should expect its demand curve to shift to the left. 
C)  Firms will leave the market and profits for firms that remain in the market will rise. 
D)  This firm is in a long-run equilibrium. 
A)  This firm is operating at its efficient scale. 
B)  This firm should expect its demand curve to shift to the left. 
C)  Firms will leave the market and profits for firms that remain in the market will rise. 
D)  This firm is in a long-run equilibrium.

Question 3

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

Accepted Answer

A)  $200 
B)  $312.50 
C)  $4000 
D)  $800 
A)  $200 
B)  $312.50 
C)  $4000 
D)  $800

Question 4

When a monopolistically competitive firm raises its price,

Accepted Answer

A)  quantity demanded falls to zero. 
B)  quantity demanded declines but not to zero. 
C)  the market supply curve shifts outward. 
D)  quantity demanded remains constant. 
A)  quantity demanded falls to zero. 
B)  quantity demanded declines but not to zero. 
C)  the market supply curve shifts outward. 
D)  quantity demanded remains constant.

Question 5

Monopolistic competition is considered inefficient because

Accepted Answer

A)  price exceeds marginal cost. 
B)  output is excessive. 
C)  long-run profits are positive. 
D)  barriers to entry limit the number of firms in the market. 
A)  price exceeds marginal cost. 
B)  output is excessive. 
C)  long-run profits are positive. 
D)  barriers to entry limit the number of firms in the market.

Question 6

Scenario 16-9
Dean goes to the grocery store to buy chips and soda for a party. He purchases brand name products even though generic versions are available at lower prices. His friend John says he was irrational to spend more for a nearly identical product. His friend Martina agreed with Dean's decision to spend more for the brand name products.
-Refer to Scenario 16-9. If Dean bought the brand name because of advertising he saw for the product, a defender of advertising would say

Accepted Answer

the advertising conv

Question 7

Figure 16-11  
-Refer to Figure 16-11. The profit for this firm is

Accepted Answer

A)  $375. 
B)  $500. 
C)  $1000. 
D)  $1250. 
A)  $375. 
B)  $500. 
C)  $1000. 
D)  $1250.

Question 8

The deadweight loss that is associated with a monopolistically competitive market is a result of

Accepted Answer

A)  price falling short of marginal cost in order to increase market share. 
B)  price exceeding marginal cost. 
C)  the firm operating in a regulated industry. 
D)  excessive advertising costs. 
A)  price falling short of marginal cost in order to increase market share. 
B)  price exceeding marginal cost. 
C)  the firm operating in a regulated industry. 
D)  excessive advertising costs.

Question 9

A firm can earn economic profits in the short run

Accepted Answer

A)  only when the market is perfectly competitive. 
B)  only when the market is a monopoly or monopolistically competitive. 
C)  only when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistid. 
A)  only when the market is perfectly competitive. 
B)  only when the market is a monopoly or monopolistically competitive. 
C)  only when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistid.

Question 10

A typical firm in the US economy would be classified as

Accepted Answer

A)  perfectly competitive. 
B)  imperfectly competitive. 
C)  a duopolist. 
D)  an oligopolist. 
A)  perfectly competitive. 
B)  imperfectly competitive. 
C)  a duopolist. 
D)  an oligopolist.

Question 11

Under which of the following market structures would consumers likely pay the highest price for a product?

Accepted Answer

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

Question 12

A firm charges a price that exceeds marginal cost

Accepted Answer

A)  when the market is a monopoly. 
B)  when the market is a monopoly or monopolistically competitive. 
C)  when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistid. 
A)  when the market is a monopoly. 
B)  when the market is a monopoly or monopolistically competitive. 
C)  when the market is monopolistically competitive or perfectly competitive. 
D)  when the market is perfectly competitive, monopolistically competitive, or monopolistid.

Question 13

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

Accepted Answer

A)  the number of firms in the market decreases. 
B)  each existing firm experiences a decrease in demand for its product. 
C)  each firm experiences an upward shift of its marginal cost and average total cost curves. 
D)  each existing firm's average total cost falls to bring economic profit back to zero. 
A)  the number of firms in the market decreases. 
B)  each existing firm experiences a decrease in demand for its product. 
C)  each firm experiences an upward shift of its marginal cost and average total cost curves. 
D)  each existing firm's average total cost falls to bring economic profit back to zero.

Question 14

Figure 16-13  
-Refer to Figure 16-13. Which of the following areas represents the profit for this profit maximizing monopolistically competitive firm?

Accepted Answer

A)  BCHG 
B)  BCIJ 
C)  GHIJ 
D)  0BCL 
A)  BCHG 
B)  BCIJ 
C)  GHIJ 
D)  0BCL

Question 15

If "too much choice" is a problem for consumers, it would occur in which market structure(s)?

Accepted Answer

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

Question 16

A monopolistically competitive firm faces the following demand curve for its product:   The firm has total fixed costs of $120 and a constant marginal cost of $12 per unit. We can conclude that

Accepted Answer

A)  firms will exit this market. 
B)  firms will enter this market. 
C)  this market is in long-run equilibrium. 
D)  this firm is operating at its efficient scale. 
A)  firms will exit this market. 
B)  firms will enter this market. 
C)  this market is in long-run equilibrium. 
D)  this firm is operating at its efficient scale.

Question 17

List five goods that are likely sold in a monopolistically competitive market.

Accepted Answer

Books, CDs, movies,

Question 18

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. The firm's maximum profit is

Accepted Answer

A)  $-5,000.00. 
B)  $0. 
C)  $5,000.00. 
D)  $8,887.78. 
A)  $-5,000.00. 
B)  $0. 
C)  $5,000.00. 
D)  $8,887.78.

Question 19

For a monopolistically competitive firm, at the profit-maximizing quantity of output,

Accepted Answer

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

Question 20

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

Accepted Answer

A) True 
 B)False

Which of the following is most likely sold in a monopolistically competitive market?

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

When a monopolistically competitive firm raises its price,

Monopolistic competition is considered inefficient because

Figure 16-11 -Refer to Figure 16-11. The profit for this firm is

The deadweight loss that is associated with a monopolistically competitive market is a result of

A firm can earn economic profits in the short run

A typical firm in the US economy would be classified as

Under which of the following market structures would consumers likely pay the highest price for a product?

A firm charges a price that exceeds marginal cost

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

Figure 16-13 -Refer to Figure 16-13. Which of the following areas represents the profit for this profit maximizing monopolistically competitive firm?

If "too much choice" is a problem for consumers, it would occur in which market structure(s)?

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $120 and a constant marginal cost of $12 per unit. We can conclude that

List five goods that are likely sold in a monopolistically competitive market.

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

For a monopolistically competitive firm, at the profit-maximizing quantity of output,

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Exam 16: Monopolistic Competition

Which of the following is most likely sold in a monopolistically competitive market?

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

When a monopolistically competitive firm raises its price,

Monopolistic competition is considered inefficient because

Figure 16-11 -Refer to Figure 16-11. The profit for this firm is

The deadweight loss that is associated with a monopolistically competitive market is a result of

A firm can earn economic profits in the short run

A typical firm in the US economy would be classified as

Under which of the following market structures would consumers likely pay the highest price for a product?

A firm charges a price that exceeds marginal cost

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

Figure 16-13 -Refer to Figure 16-13. Which of the following areas represents the profit for this profit maximizing monopolistically competitive firm?

If "too much choice" is a problem for consumers, it would occur in which market structure(s)?

A monopolistically competitive firm faces the following demand curve for its product: The firm has total fixed costs of $120 and a constant marginal cost of $12 per unit. We can conclude that

List five goods that are likely sold in a monopolistically competitive market.

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

For a monopolistically competitive firm, at the profit-maximizing quantity of output,

Empirical evidence suggests that advertising usually leads to an increase in the price for advertised products.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters