Question 1

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?

Accepted Answer

perfect competition

Question 2

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 3

Figure 16-4  
-Refer to Figure 16-4. The firm in this figure is monopolistically competitive. This firm

Accepted Answer

A)  is operating in the long run. 
B)  is earning a short-run economic profit. 
C)  is incurring a short-run loss. 
D)  The answer cannot be determined from the information given. 
A)  is operating in the long run. 
B)  is earning a short-run economic profit. 
C)  is incurring a short-run loss. 
D)  The answer cannot be determined from the information given.

Question 4

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

Accepted Answer

A) True 
 B)False

Question 5

To be considered an oligopoly, the market must have a concentration ratio below 50%.

Accepted Answer

A) True 
 B)False

Question 6

When a firm in a monopolistically competitive market earns zero economic profit, its product price must equal marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

Table 16-5
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.  
-Refer to Table 16-5. How much profit will this firm earn at the monopolistically competitive price?

Accepted Answer

A)  $0 
B)  $5 
C)  $12 
D)  $16 
A)  $0 
B)  $5 
C)  $12 
D)  $16

Question 8

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

Accepted Answer

A)  the number of firms in the market decreases. 
B)  each existing firm experiences a decrease in demand for its product. 
C)  each firm experiences an upward shift of its marginal cost and average total cost curves. 
D)  each existing firm's average total cost falls to bring economic profit back to zero. 
A)  the number of firms in the market decreases. 
B)  each existing firm experiences a decrease in demand for its product. 
C)  each firm experiences an upward shift of its marginal cost and average total cost curves. 
D)  each existing firm's average total cost falls to bring economic profit back to zero.

Question 9

A monopolistically competitive market is characterized by barriers to entry.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A)  P > MR and P = MC 
B)  ATC = demand and MR = MC 
C)  P  ATC and demand > MR 
A)  P > MR and P = MC 
B)  ATC = demand and MR = MC 
C)  P  ATC and demand > MR

Question 11

The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 12

Figure 16-14  
-Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Accepted Answer

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

Question 13

Figure 16-14  
-Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Accepted Answer

A)  ABC 
B)  IJK 
C)  BHJ 
D)  BCIJ 
A)  ABC 
B)  IJK 
C)  BHJ 
D)  BCIJ

Question 14

In markets where restrictions on advertising have been used to curtail competition, the U.S. courts have generally

Accepted Answer

A)  referred the matters of advertising restrictions to executive regulators. 
B)  enforced industry-wide agreements to restrict advertising. 
C)  been silent on the effect of explicit advertising restrictions. 
D)  overturned laws that prohibit advertising. 
A)  referred the matters of advertising restrictions to executive regulators. 
B)  enforced industry-wide agreements to restrict advertising. 
C)  been silent on the effect of explicit advertising restrictions. 
D)  overturned laws that prohibit advertising.

Question 15

If we observe a great deal of advertising of men's shaving products, we can infer that

Accepted Answer

A)  the market for those products is perfectly competitive. 
B)  it costs firms very little to produce those products. 
C)  those products are highly differentiated. 
D)  firms are irrational in their decisions to advertise. 
A)  the market for those products is perfectly competitive. 
B)  it costs firms very little to produce those products. 
C)  those products are highly differentiated. 
D)  firms are irrational in their decisions to advertise.

Question 16

In a monopolistically competitive market,

Accepted Answer

A)  entry by new firms is impeded by barriers to entry; thus, the number of firms in the market is never ideal. 
B)  entry by new firms is impeded by barriers to entry, but the number of firms in the market is nevertheless always ideal. 
C)  free entry ensures that the number of firms in the market is ideal. 
D)  there may be too few or too many firms in the market, despite free entry. 
A)  entry by new firms is impeded by barriers to entry; thus, the number of firms in the market is never ideal. 
B)  entry by new firms is impeded by barriers to entry, but the number of firms in the market is nevertheless always ideal. 
C)  free entry ensures that the number of firms in the market is ideal. 
D)  there may be too few or too many firms in the market, despite free entry.

Question 17

In the debate between the critics and defenders of advertising, what conclusion have policymakers come to regarding the effect of advertising on competition - advertising makes markets more competitive or less competitive?

Accepted Answer

The answer of In the debate between the critics and...

Question 18

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 19

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.  
-Refer to Table 16-4. If the government forces this firm to produce at its efficient output level, how much profit will this firm earn?

Accepted Answer

A)  a $12 loss 
B)  a $13 profit 
C)  a $25 profit 
D)  a $32 profit 
A)  a $12 loss 
B)  a $13 profit 
C)  a $25 profit 
D)  a $32 profit

Question 20

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 4, what quantity would a profit-maximizing monopolist produce?

Accepted Answer

A)  Q = 2 
B)  Q = 4 
C)  Q = 6 
D)  Q = 8 
A)  Q = 2 
B)  Q = 4 
C)  Q = 6 
D)  Q = 8

Exam 16: Monopolistic Competition

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?

The two types of imperfectly competitive markets are

Figure 16-4 -Refer to Figure 16-4. The firm in this figure is monopolistically competitive. This firm

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

To be considered an oligopoly, the market must have a concentration ratio below 50%.

When a firm in a monopolistically competitive market earns zero economic profit, its product price must equal marginal cost.

Table 16-5 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-5. How much profit will this firm earn at the monopolistically competitive price?

Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,

A monopolistically competitive market is characterized by barriers to entry.

Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

Figure 16-14 -Refer to Figure 16-14. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Figure 16-14 -Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

In markets where restrictions on advertising have been used to curtail competition, the U.S. courts have generally

If we observe a great deal of advertising of men's shaving products, we can infer that

In a monopolistically competitive market,

In the debate between the critics and defenders of advertising, what conclusion have policymakers come to regarding the effect of advertising on competition - advertising makes markets more competitive or less competitive?

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

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4. If the government forces this firm to produce at its efficient output level, how much profit will this firm earn?

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 4, what quantity would a profit-maximizing monopolist produce?

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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