Question 1

Brand management refers to

Accepted Answer

A)  picking a brand name for a new product that will attract attention. 
B)  the efforts to maintain the differentiation of a product over time. 
C)  efforts to reduce the cost of production. 
D)  selling the right to use a brand name in a particular market. 
A)  picking a brand name for a new product that will attract attention. 
B)  the efforts to maintain the differentiation of a product over time. 
C)  efforts to reduce the cost of production. 
D)  selling the right to use a brand name in a particular market.

Question 2

Is a monopolistically competitive firm productively efficient?

Accepted Answer

A)  No, because it does not produce at minimum average total cost. 
B)  Yes, because it produces where marginal cost equals marginal revenue. 
C)  No, because price is greater than marginal cost. 
D)  Yes, because price equals average total cost. 
A)  No, because it does not produce at minimum average total cost. 
B)  Yes, because it produces where marginal cost equals marginal revenue. 
C)  No, because price is greater than marginal cost. 
D)  Yes, because price equals average total cost.

Question 3

-Refer to Figure 10-14. What is the area that represents the firm's profit?

Accepted Answer

A)  profit = 0 
B)  P4edP2 
C)  P4eaP1 
D)  P3baP2 
A)  profit = 0 
B)  P4edP2 
C)  P4eaP1 
D)  P3baP2

Question 4

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

Accepted Answer

A) True 
 B)False

Question 5

If a monopolistically competitive firm breaks even, the firm

Accepted Answer

A)  is earning an accounting profit and will have to pay taxes on that profit. 
B)  is earning zero accounting and zero economic profit. 
C)  should advertise its product to stimulate demand. 
D)  should expand production. 
A)  is earning an accounting profit and will have to pay taxes on that profit. 
B)  is earning zero accounting and zero economic profit. 
C)  should advertise its product to stimulate demand. 
D)  should expand production.

Question 6

A monopolistically competitive industry that earns economic profits in the short run will

Accepted Answer

A)  continue to earn economic profits in the long run. 
B)  experience the entry of new rival firms into the industry in the long run. 
C)  experience the exit of existing firms out of the industry in the long run. 
D)  experience a rise in demand in the long run. 
A)  continue to earn economic profits in the long run. 
B)  experience the entry of new rival firms into the industry in the long run. 
C)  experience the exit of existing firms out of the industry in the long run. 
D)  experience a rise in demand in the long run.

Question 7

Which of the following statements is true about advertising by a monopolistically competitive firm?

Accepted Answer

A)  Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products. 
B)  Advertising could make the monopolistic competitor's demand more inelastic, but advertising has no effect on a perfect competitor's demand. 
C)  Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm's product. 
D)  Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry. 
A)  Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products. 
B)  Advertising could make the monopolistic competitor's demand more inelastic, but advertising has no effect on a perfect competitor's demand. 
C)  Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm's product. 
D)  Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry.

Question 8

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Accepted Answer

A) True 
 B)False

Question 9

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm. Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

Accepted Answer

and productive efficiency (lowest possib

Question 10

Monopolistic competition is a market structure in which

Accepted Answer

A)  firms produce and sell products for which there are no close substitutes. 
B)  the demand curve for a typical firm is horizontal. 
C)  firms cannot influence the market price. 
D)  barriers to entry are low. 
A)  firms produce and sell products for which there are no close substitutes. 
B)  the demand curve for a typical firm is horizontal. 
C)  firms cannot influence the market price. 
D)  barriers to entry are low.

Question 11

Explain the differences between total revenue, average revenue, and marginal revenue.

Accepted Answer

Total revenue equals price × q

Question 12

For the monopolistically competitive firm

Accepted Answer

A)  Price (P) = Marginal Revenue (MR) = Average Revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR. 
A)  Price (P) = Marginal Revenue (MR) = Average Revenue (AR). 
B)  P = MR > AR. 
C)  P = AR > MR. 
D)  P > MR = AR.

Question 13

-Refer to Figure 10-12. What is the monopolistic competitor's profit-maximising output?

Accepted Answer

A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units 
A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units

Question 14

-Refer to Table 10-2. What is Eco Energy's profit?

Accepted Answer

A)  $125 
B)  $140 
C)  $145 
D)  $150 
A)  $125 
B)  $140 
C)  $145 
D)  $150

Question 15

The table below shows the demand and cost data facing 'Velvet Touches,' a monopolistically competitive producer of velvet throw pillows.
   Use the data to answer the following questions.
a. Complete the Total Revenue (TR), Marginal Revenue (MR) and Marginal Cost (MC) columns above.
b. What are the profit-maximising price and quantity for Velvet Touches?
c. Is the firm making a profit or a loss? How much is the profit or loss? Show your work.
d. Is this firm operating in the long run or in the short run? Explain your answer.
e. If the firm's profit or loss is typical of all firms in the market for throw pillows, what is likely to happen in the future? Will there be more firms or will some existing firms leave the industry? Explain your answer.
f. What will happen to the typical firm's profit or loss after all entry/exit adjustments?

Accepted Answer

= $34
d. The firm is in the short run be

Question 16

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

Accepted Answer

A)  The firm's demand curve will shift to the right if it stays in business in the long run. 
B)  The firm will exit the industry if it continues to suffer economic losses. 
C)  The firm will break even if its stays in business in the long run. 
D)  In the long run, the firm will be able to charge a price that is greater than its average total cost. 
A)  The firm's demand curve will shift to the right if it stays in business in the long run. 
B)  The firm will exit the industry if it continues to suffer economic losses. 
C)  The firm will break even if its stays in business in the long run. 
D)  In the long run, the firm will be able to charge a price that is greater than its average total cost.

Question 17

-Refer to Figure 10-12. What is the productively efficient output for the firm represented in the diagram?

Accepted Answer

A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units 
A)  Q1 units 
B)  Q2 units 
C)  Q3 units 
D)  Q4 units

Question 18

The key characteristics of a monopolistically competitive market structure include

Accepted Answer

A)  many small (relative to the total market) sellers acting independently. 
B)  all sellers sell a homogeneous product. 
C)  barriers to entry are strong. 
D)  sellers have no incentive to advertise their products. 
A)  many small (relative to the total market) sellers acting independently. 
B)  all sellers sell a homogeneous product. 
C)  barriers to entry are strong. 
D)  sellers have no incentive to advertise their products.

Question 19

-Refer to Figure 10-8. What is the profit-maximising output level?

Accepted Answer

A)  22 cases 
B)  24 cases 
C)  30 cases 
D)  38 cases 
A)  22 cases 
B)  24 cases 
C)  30 cases 
D)  38 cases

Question 20

What is the difference between zero accounting profit and zero economic profit?

Accepted Answer

Economic profits take into account oppor

Brand management refers to

Is a monopolistically competitive firm productively efficient?

-Refer to Figure 10-14. What is the area that represents the firm's profit?

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

If a monopolistically competitive firm breaks even, the firm

A monopolistically competitive industry that earns economic profits in the short run will

Which of the following statements is true about advertising by a monopolistically competitive firm?

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm. Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

Monopolistic competition is a market structure in which

Explain the differences between total revenue, average revenue, and marginal revenue.

For the monopolistically competitive firm

-Refer to Figure 10-12. What is the monopolistic competitor's profit-maximising output?

-Refer to Table 10-2. What is Eco Energy's profit?

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

-Refer to Figure 10-12. What is the productively efficient output for the firm represented in the diagram?

The key characteristics of a monopolistically competitive market structure include

-Refer to Figure 10-8. What is the profit-maximising output level?

What is the difference between zero accounting profit and zero economic profit?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 10: Monopolistic Competition : The Competitive Model in More Realistic Setting

Brand management refers to

Is a monopolistically competitive firm productively efficient?

-Refer to Figure 10-14. What is the area that represents the firm's profit?

In the long-run equilibrium, both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

If a monopolistically competitive firm breaks even, the firm

A monopolistically competitive industry that earns economic profits in the short run will

Which of the following statements is true about advertising by a monopolistically competitive firm?

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm. Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

Monopolistic competition is a market structure in which

Explain the differences between total revenue, average revenue, and marginal revenue.

For the monopolistically competitive firm

-Refer to Figure 10-12. What is the monopolistic competitor's profit-maximising output?

-Refer to Table 10-2. What is Eco Energy's profit?

Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

-Refer to Figure 10-12. What is the productively efficient output for the firm represented in the diagram?

The key characteristics of a monopolistically competitive market structure include

-Refer to Figure 10-8. What is the profit-maximising output level?

What is the difference between zero accounting profit and zero economic profit?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters