Question 1

In the long run,

Accepted Answer

A)  monopolistically competitive firms earn a higher profit than perfectly competitive firms because monopolistically competitive firms have some monopoly power. 
B)  monopolistically competitive firms produce a higher output than perfectly competitive firms because competition drives the perfectly competitive firms' output down. 
C)  both monopolistically competitive and perfectly competitive firms produce where P = MC. 
D)  both monopolistically competitive and perfectly competitive firms produce where P = ATd. 
A)  monopolistically competitive firms earn a higher profit than perfectly competitive firms because monopolistically competitive firms have some monopoly power. 
B)  monopolistically competitive firms produce a higher output than perfectly competitive firms because competition drives the perfectly competitive firms' output down. 
C)  both monopolistically competitive and perfectly competitive firms produce where P = MC. 
D)  both monopolistically competitive and perfectly competitive firms produce where P = ATd.

Question 2

Figure 16-1        
-Refer to Figure 16-1. Which of the following sets of explanations best describes the differences between the graphs above?

Accepted Answer

A)  Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: oligopoly firm's demand curve
Panel D: perfectly competitive firm's demand curve 
B)  Panel A: oligopoly firm's demand curve Panel B: perfectly competitive firm's demand curve
Panel C: monopolistically competitive firm's demand curve
Panel D: supply curve 
C)  Panel A: perfectly competitive firm's demand curve Panel B: monopolistically competitive firm's demand curve Panel C: monopoly firm's demand curve
Panel D: supply curve 
D)  Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: perfectly competitive firm's demand curve
Panel D: supply curve 
A)  Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: oligopoly firm's demand curve
Panel D: perfectly competitive firm's demand curve 
B)  Panel A: oligopoly firm's demand curve Panel B: perfectly competitive firm's demand curve
Panel C: monopolistically competitive firm's demand curve
Panel D: supply curve 
C)  Panel A: perfectly competitive firm's demand curve Panel B: monopolistically competitive firm's demand curve Panel C: monopoly firm's demand curve
Panel D: supply curve 
D)  Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: perfectly competitive firm's demand curve
Panel D: supply curve

Question 3

Which of the following best describes the idea of excess capacity in monopolistic competition?

Accepted Answer

A)  Firms produce more output than is socially desirable. 
B)  The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve. 
C)  Due to product differentiation, firms choose output levels where price equals average total cost. 
D)  Firms keep some surplus output on hand in case there is a shift in the demand for their product. 
A)  Firms produce more output than is socially desirable. 
B)  The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve. 
C)  Due to product differentiation, firms choose output levels where price equals average total cost. 
D)  Firms keep some surplus output on hand in case there is a shift in the demand for their product.

Question 4

Critics of markets that are characterized by firms that sell brand name products argue that brand names encourage consumers to pay more for branded products that

Accepted Answer

A)  have elastic demand curves. 
B)  are very different from generic products. 
C)  are indistinguishable from generic products. 
D)  consumer-advocate groups have found to be inferior. 
A)  have elastic demand curves. 
B)  are very different from generic products. 
C)  are indistinguishable from generic products. 
D)  consumer-advocate groups have found to be inferior.

Question 5

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Accepted Answer

A)  advertising. 
B)  the product-variety externality. 
C)  intermediate materials. 
D)  taxes and regulation. 
A)  advertising. 
B)  the product-variety externality. 
C)  intermediate materials. 
D)  taxes and regulation.

Question 6

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
  
-Refer to Table 16-1. What is the concentration ratio in Industry A?

Accepted Answer

A)  38% 
B)  71% 
C)  92% 
D)  98% 
A)  38% 
B)  71% 
C)  92% 
D)  98%

Question 7

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Accepted Answer

A)  0.5 
B)  2 
C)  10 
D)  20 
A)  0.5 
B)  2 
C)  10 
D)  20

Question 8

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

Accepted Answer

A)  exceeds the level of output at which marginal revenue equals marginal cost. 
B)  exceeds the level of output at which marginal cost equals average total cost. 
C)  falls short of the level of output at which price equals marginal cost. 
D)  exceeds the firm's efficient scale of output. 
A)  exceeds the level of output at which marginal revenue equals marginal cost. 
B)  exceeds the level of output at which marginal cost equals average total cost. 
C)  falls short of the level of output at which price equals marginal cost. 
D)  exceeds the firm's efficient scale of output.

Question 9

A firm has the following cost structure:   If this firm is in a typical monopolistically competitive market, in the long run it will likely produce

Accepted Answer

A)  8 or fewer units of output. 
B)  10 units of output. 
C)  more than 10 units of output. 
D)  None of the above are necessarily correct because there is not enough information to tell. 
A)  8 or fewer units of output. 
B)  10 units of output. 
C)  more than 10 units of output. 
D)  None of the above are necessarily correct because there is not enough information to tell.

Question 10

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.
  
-Refer to Table 16-3. What is the concentration ratio for Industry A?

Accepted Answer

A)  approximately 52% 
B)  approximately 58% 
C)  approximately 66% 
D)  approximately 72% 
A)  approximately 52% 
B)  approximately 58% 
C)  approximately 66% 
D)  approximately 72%

Question 11

The two types of imperfectly competitive markets are

Accepted Answer

A)  markets with advertising and markets with price competition. 
B)  public goods and common resources. 
C)  oligopoly and monopoly. 
D)  monopolistic competition and oligopoly. 
A)  markets with advertising and markets with price competition. 
B)  public goods and common resources. 
C)  oligopoly and monopoly. 
D)  monopolistic competition and oligopoly.

Question 12

Figure 16-12  
-Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Accepted Answer

The answer of Figure 16-12  
-Refer to Figure 16-12....

Question 13

Which of the following goods are not likely to be sold in monopolistically competitive markets?

Accepted Answer

A)  jeans 
B)  books 
C)  tap water 
D)  clocks 
A)  jeans 
B)  books 
C)  tap water 
D)  clocks

Question 14

In the long run, monopolistically competitive firms produce where demand equals average total cost.

Accepted Answer

A) True 
 B)False

Question 15

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods. Firm B produces and sells industrial products. Firm C produces and sells an agricultural commodity. Which firm is likely to spend the greatest portion of its total revenue on advertising?

Accepted Answer

A)  firm A 
B)  firm B 
C)  firm C 
D)  There is no reason to believe that any one of the three firms would spend a greater portion of its total revenue on advertising than the other two firms. 
A)  firm A 
B)  firm B 
C)  firm C 
D)  There is no reason to believe that any one of the three firms would spend a greater portion of its total revenue on advertising than the other two firms.

Question 16

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
  
-Refer to Table 16-1. Which industry is the least competitive?

Accepted Answer

A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D 
A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D

Question 17

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Accepted Answer

A) True 
 B)False

Question 18

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
  
-Refer to Table 16-1. What is the concentration ratio in Industry C?

Accepted Answer

A)  13% 
B)  32% 
C)  52% 
D)  84% 
A)  13% 
B)  32% 
C)  52% 
D)  84%

Question 19

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 has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

Accepted Answer

A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units 
A)  3 units 
B)  4 units 
C)  5 units 
D)  6 units

Question 20

Figure 16-2. The figure is drawn for a monopolistically competitive firm.  
-Refer to Figure 16-2. The firm's profit­maximizing level of output is

Accepted Answer

A)  16 units. 
B)  24 units. 
C)  32 units. 
D)  48 units. 
A)  16 units. 
B)  24 units. 
C)  32 units. 
D)  48 units.

Exam 16: Monopolistic Competition

In the long run,

Figure 16-1 -Refer to Figure 16-1. Which of the following sets of explanations best describes the differences between the graphs above?

Which of the following best describes the idea of excess capacity in monopolistic competition?

Critics of markets that are characterized by firms that sell brand name products argue that brand names encourage consumers to pay more for branded products that

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry A?

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

A firm has the following cost structure: If this firm is in a typical monopolistically competitive market, in the long run it will likely produce

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. What is the concentration ratio for Industry A?

The two types of imperfectly competitive markets are

Figure 16-12 -Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Which of the following goods are not likely to be sold in monopolistically competitive markets?

In the long run, monopolistically competitive firms produce where demand equals average total cost.

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods. Firm B produces and sells industrial products. Firm C produces and sells an agricultural commodity. Which firm is likely to spend the greatest portion of its total revenue on advertising?

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. Which industry is the least competitive?

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry C?

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 has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. The firm's profit­maximizing level of output is

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

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. The firm's profitmaximizing level of output is