Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers.

Productive efficiency does not hold for a profit-maximizing, monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies-of-scale region of its average total cost curve.

Which of the following characteristics is not common to monopolistic competition and perfect competition?

Long-run equilibrium under monopolistic competition and perfect competition is similar in that

Some factors that allow firms to make economic profits are beyond its control. All but one of the following is an uncontrollable factor. Which factor is controllable?

Figure 13-18 -Refer to Figure 13-18. The diagram demonstrates that

When a firm has been granted a trademark, which grants legal protection against other firms using the name of the product that has been granted the trademark, the firm

There are many cattle ranchers in the world, and there are also many McDonald's restaurants in the world. Why, then, does a McDonald's restaurant face a downward-sloping demand curve while a cattle rancher faces a horizontal demand curve?

In both monopolistically competitive and perfectly competitive industries,

If price exceeds average variable cost but is less than average total cost, a firm

For a monopolistically competitive firm, marginal revenue

Table 13-1 -Refer to Table 13-1. What portion of the marginal revenue of the 4th unit is due to the output effect and what portion is due to the price effect?

Figure 13-11 -Refer to Figure 13-11. What is the monopolistic competitor's profit-maximizing price?

Table 13-3 Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3. What is the amount of the firm's loss at its optimal output level?

Which of the following is the best example of a firm that competes in a monopolistically competitive market?

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC) but only the perfectly competitive firm achieves allocative efficiency. Explain why this is the case.

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

If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic.

Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

How might a monopolistically competitive firm continually earn economic profit greater than zero?