Exam 13: Monopolistic Competition

Communist central planners didn’t care about product differentiation, opting instead for a uniform design of products in order to achieve

If the representative firm in a monopolistically competitive industry has an optimal output where P < ATC, the industry will expand in the long run.

Compared to pure competition, monopolistic competition

Answer the question on the basis of the following demand and cost data for a specific firm. $\quad$$\quad$$\quad$$\quad$$\text { Demand Data }$ $\quad$$\quad$$\quad$ $\text { Cost Data }$ (3) Total (1) (2) Quantit Output Total Price Price Y Cost \ 50 \ 35 2 2 \ 45 45 30 3 3 55 40 25 4 4 70 35 20 5 5 90 30 15 6 6 115 25 10 7 7 145 20 5 8 8 180 Suppose that entry of firms into the industry changes this firm's demand schedule from columns 1 and 3 to columns 2 and 3. Maximum economic profit will

A monopolistically competitive firm has a

The demand curve faced by a monopolistically competitive firm

Which of the following statements is correct?

Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will

The monopolistically competitive seller's demand curve will become more elastic the

Monopolistic competition entails a deadweight loss to society, even if the firms earn zero economic profits.

A monopolistically competitive firm's marginal revenue curve

Answer the question on the basis of the following demand and cost data for a specific firm. $\quad$$\quad$$\quad$$\quad$$\text { Demand Data }$ $\quad$$\quad$$\quad$ $\text { Cost Data }$ (1) (2) (3) Total Price Price Quanti Outpu Cost ty t 11.0 \ 10.0 6 6 \ 61 0 0 9.99 8.85 7 7 62 9.00 8.00 8 8 64 8.00 7.00 9 9 67 7.10 6.10 10 10 72 6.00 5.00 11 11 79 5.15 4.15 12 12 86 If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing level of output will be

If you sum the squares of the market shares of each firm in an industry (as measured by percent of industry sales), you are calculating the

"Variety is the spice of life" is best applied to which market structure?

In the short run, a profit-maximizing monopolistically competitive firm sets it price

We would expect the four-firm concentration ratio of the restaurant industry in a large metropolitan area to be about 0.80, or 80 percent, and higher.

Excess capacity refers to the

Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. $\quad$$\quad$$\quad$$\quad$ $\text { Cost Data }$ $\quad$$\quad$$\quad$ $\text { Demand Data }$ Total Output Total Cost Quantity Demanded Price 0 \ 25 0 \ 60 1 40 1 55 2 45 2 50 3 55 3 45 4 70 4 40 5 90 5 35 6 115 6 30 What output and price levels will maximize the firm's profit in the short run?

Answer the question on the basis of the following demand and cost data for a specific firm. $\quad$$\quad$$\quad$$\quad$$\text { Demand Data }$ $\quad$$\quad$$\quad$ $\text { Cost Data }$ (3) Total (1) (2) Quantit Output Total Price Price Y Cost \ 50 \ 35 2 2 \ 45 45 30 3 3 55 40 25 4 4 70 35 20 5 5 90 30 15 6 6 115 25 10 7 7 145 20 5 8 8 180 If columns 1 and 3 are this firm's demand schedule, the profit-maximizing level of output will be

If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will shift