Question 1

Which market structure would likely have the highest concentration ratio?

Accepted Answer

A)  Monopoly 
B)  Oligopoly 
C)  Monopolistic competition 
D)  Perfect competition 
A)  Monopoly 
B)  Oligopoly 
C)  Monopolistic competition 
D)  Perfect competition

Question 2

The primary claim of defenders of advertising is that it

Accepted Answer

A)  conveys information about firm profitability. 
B)  is psychological rather than informational. 
C)  enhances the information available to consumers. 
D)  reduces the elasticity of demand for a firm's product. 
A)  conveys information about firm profitability. 
B)  is psychological rather than informational. 
C)  enhances the information available to consumers. 
D)  reduces the elasticity of demand for a firm's product.

Question 3

The free entry and exit of firms in a monopolistically competitive market guarantees that

Accepted Answer

A)  both economic profits and economic losses can persist in the long run. 
B)  both economic profits and economic losses disappear in the long run. 
C)  economic profits, but not economic losses, can persist in the long run. 
D)  economic losses, but not economic profits, can persist in the long run. 
A)  both economic profits and economic losses can persist in the long run. 
B)  both economic profits and economic losses disappear in the long run. 
C)  economic profits, but not economic losses, can persist in the long run. 
D)  economic losses, but not economic profits, can persist in the long run.

Question 4

If firms in a monopolistically competitive market are earning positive profits, then

Accepted Answer

A)  firms will likely be subject to regulation. 
B)  barriers to entry will be strengthened. 
C)  some firms will exit the market. 
D)  new firms will enter the market. 
A)  firms will likely be subject to regulation. 
B)  barriers to entry will be strengthened. 
C)  some firms will exit the market. 
D)  new firms will enter the market.

Question 5

A concentration ratio

Accepted Answer

A)  measures the percentage of total output supplied by the four largest firms in the industry. 
B)  reflects the level of competition in an industry. 
C)  is related to the control that each firm has over price. 
D)  All of the above are correct. 
A)  measures the percentage of total output supplied by the four largest firms in the industry. 
B)  reflects the level of competition in an industry. 
C)  is related to the control that each firm has over price. 
D)  All of the above are correct.

Question 6

Excess capacity characterizes firms in monopolistically competitive markets, even in situations of long-run equilibrium.

Accepted Answer

A) True 
 B)False

Question 7

Results of the study done by Lee Benham on advertising for eyeglasses would suggest that

Accepted Answer

A)  brand loyalty and market power in the eyeglass market was likely to be more pervasive in states that allowed advertising. 
B)  eyeglass sales were more profitable in states that allowed advertising. 
C)  optometrists would not be supportive of advertising restrictions. 
D)  optometrists would enthusiastically endorse advertising restrictions. 
A)  brand loyalty and market power in the eyeglass market was likely to be more pervasive in states that allowed advertising. 
B)  eyeglass sales were more profitable in states that allowed advertising. 
C)  optometrists would not be supportive of advertising restrictions. 
D)  optometrists would enthusiastically endorse advertising restrictions.

Question 8

Figure 16-14  
-Refer to Figure 16-14. Which of the following best describes the profit-maximizing outcome for the firm depicted here?

Accepted Answer

A)  This firm is earning a short run profit, but will earn zero profit in the long run. 
B)  This firm is incurring a short run loss, but will earn zero profit in the long run. 
C)  This firm is earning zero profit in the short run, but will earn a positive profit in the long run. 
D)  This firm is in long run equilibrium and will continue to earn zero profit. 
A)  This firm is earning a short run profit, but will earn zero profit in the long run. 
B)  This firm is incurring a short run loss, but will earn zero profit in the long run. 
C)  This firm is earning zero profit in the short run, but will earn a positive profit in the long run. 
D)  This firm is in long run equilibrium and will continue to earn zero profit.

Question 9

Scenario 16-1
Suppose the following are the sales for all of the firms in two different industries.
  
-Refer to Scenario 16-1. What are the concentration ratios for these industries?

Accepted Answer

A)  Industry A: 22%, Industry B: 26% 
B)  Industry A: 41%, Industry B: 47%. 
C)  Industry A: 68%, Industry B: 79% 
D)  Industry A: 100%, Industry B: 100%. 
A)  Industry A: 22%, Industry B: 26% 
B)  Industry A: 41%, Industry B: 47%. 
C)  Industry A: 68%, Industry B: 79% 
D)  Industry A: 100%, Industry B: 100%.

Question 10

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-9. When the firm is maximizing its profit, the markup over marginal cost amounts to

Accepted Answer

A)  $16.67. 
B)  $33.33. 
C)  $50.00. 
D)  $66.66. 
A)  $16.67. 
B)  $33.33. 
C)  $50.00. 
D)  $66.66.

Question 11

Figure 16-11  
-Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Accepted Answer

firms will enter pri

Question 12

Each firm in a monopolistically competitive market

Accepted Answer

A)  earns both short-run and long-run profits. 
B)  faces a downward-sloping demand curve. 
C)  cannot earn economic profit in the short run. 
D)  sets price equal to marginal cost. 
A)  earns both short-run and long-run profits. 
B)  faces a downward-sloping demand curve. 
C)  cannot earn economic profit in the short run. 
D)  sets price equal to marginal cost.

Question 13

Scenario 16-2
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

Accepted Answer

A)  10 
B)  20 
C)  50 
D)  100 
A)  10 
B)  20 
C)  50 
D)  100

Question 14

In which of the following markets is economic profit driven to zero in the long run?

Accepted Answer

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

Question 15

Roberto consumes Coke exclusively. He claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in his mouth. In a blind taste test, Roberto is found to prefer Coke to store-brand cola eight out of ten times. The results of Roberto's taste test would refute claims by critics of brand names that

Accepted Answer

A)  consumers are always willing to pay more for brand names. 
B)  brand names cause consumers to perceive differences that do not really exist. 
C)  consumers with the lowest levels of income are the most likely to be influenced by brand name advertising. 
D)  brand names are a form of socially efficient advertising. 
A)  consumers are always willing to pay more for brand names. 
B)  brand names cause consumers to perceive differences that do not really exist. 
C)  consumers with the lowest levels of income are the most likely to be influenced by brand name advertising. 
D)  brand names are a form of socially efficient advertising.

Question 16

Which market structure(s) is(are) considered highly concentrated?

Accepted Answer

The answer of Which market structure(s) is(are) considered highly concentrated?...

Question 17

The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which

Accepted Answer

A)  marginal revenue is equal to marginal cost. 
B)  average total cost is equal to marginal revenue. 
C)  average total cost is equal to price. 
D)  average revenue exceeds average total cost. 
A)  marginal revenue is equal to marginal cost. 
B)  average total cost is equal to marginal revenue. 
C)  average total cost is equal to price. 
D)  average revenue exceeds average total cost.

Question 18

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 much profit will the firm earn at the profit-maximizing level of output?

Accepted Answer

A)  $24 
B)  $25 
C)  $41 
D)  $66 
A)  $24 
B)  $25 
C)  $41 
D)  $66

Question 19

Figure 16-14  
-Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Accepted Answer

The answer of Figure 16-14  
-Refer to Figure 16-14....

Question 20

How does advertising signal to consumers that the product is a good one?

Accepted Answer

A)  By seeing famous people using the product, consumers infer that they too can be famous. 
B)  By being willing to spend money on advertising, firms let consumers know the product is likely a good one since firms would not likely advertise a poor product. 
C)  By making consumers laugh during commercials, firms are associating positive experiences with the product. 
D)  Without allowing consumers to actually use the product, it is not possible for firms to signal to consumers the product's quality. 
A)  By seeing famous people using the product, consumers infer that they too can be famous. 
B)  By being willing to spend money on advertising, firms let consumers know the product is likely a good one since firms would not likely advertise a poor product. 
C)  By making consumers laugh during commercials, firms are associating positive experiences with the product. 
D)  Without allowing consumers to actually use the product, it is not possible for firms to signal to consumers the product's quality.

Which market structure would likely have the highest concentration ratio?

The primary claim of defenders of advertising is that it

The free entry and exit of firms in a monopolistically competitive market guarantees that

If firms in a monopolistically competitive market are earning positive profits, then

A concentration ratio

Excess capacity characterizes firms in monopolistically competitive markets, even in situations of long-run equilibrium.

Results of the study done by Lee Benham on advertising for eyeglasses would suggest that

Figure 16-14 -Refer to Figure 16-14. Which of the following best describes the profit-maximizing outcome for the firm depicted here?

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. What are the concentration ratios for these industries?

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. When the firm is maximizing its profit, the markup over marginal cost amounts to

Figure 16-11 -Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Each firm in a monopolistically competitive market

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

In which of the following markets is economic profit driven to zero in the long run?

Which market structure(s) is(are) considered highly concentrated?

The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which

Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

How does advertising signal to consumers that the product is a good one?

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

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Exam 16: Monopolistic Competition

Which market structure would likely have the highest concentration ratio?

The primary claim of defenders of advertising is that it

The free entry and exit of firms in a monopolistically competitive market guarantees that

If firms in a monopolistically competitive market are earning positive profits, then

A concentration ratio

Excess capacity characterizes firms in monopolistically competitive markets, even in situations of long-run equilibrium.

Results of the study done by Lee Benham on advertising for eyeglasses would suggest that

Figure 16-14 -Refer to Figure 16-14. Which of the following best describes the profit-maximizing outcome for the firm depicted here?

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. What are the concentration ratios for these industries?

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. When the firm is maximizing its profit, the markup over marginal cost amounts to

Figure 16-11 -Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Each firm in a monopolistically competitive market

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 0, how much total consumer surplus would consumers receive in this market?

In which of the following markets is economic profit driven to zero in the long run?

Which market structure(s) is(are) considered highly concentrated?

The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which

Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

How does advertising signal to consumers that the product is a good one?

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