Question 1

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Accepted Answer

A)  The monopolistically competitive firm advertises. 
B)  The monopolistically competitive firm produces a quantity of output that falls short of the socially optimal level. 
C)  Monopolistic competition features many buyers. 
D)  Monopolistic competition features many sellers. 
A)  The monopolistically competitive firm advertises. 
B)  The monopolistically competitive firm produces a quantity of output that falls short of the socially optimal level. 
C)  Monopolistic competition features many buyers. 
D)  Monopolistic competition features many sellers.

Question 2

Figure 16-12  
-Refer to Figure 16-12. How much excess capacity does this firm have?

Accepted Answer

The answer of Figure 16-12  
-Refer to Figure 16-12....

Question 3

Which of the following correctly lists the products in order from most advertised to least advertised?

Accepted Answer

A)  soft drinks, breakfast cereals, dog food 
B)  corn, dog food, communication satellites 
C)  dog food, communication satellites, corn 
D)  wheat, corn, crude oil 
A)  soft drinks, breakfast cereals, dog food 
B)  corn, dog food, communication satellites 
C)  dog food, communication satellites, corn 
D)  wheat, corn, crude oil

Question 4

The two types of imperfectly competitive markets are

Accepted Answer

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

Question 5

Describe the shape of the monopolistically competitive firm's demand curve.

Accepted Answer

The answer of Describe the shape of the monopolistically competitive...

Question 6

Figure 16-5  
-Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

Accepted Answer

A)  panel a 
B)  panel b 
C)  panel c 
D)  All of the above are correct. 
A)  panel a 
B)  panel b 
C)  panel c 
D)  All of the above are correct.

Question 7

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

Accepted Answer

A)  exceeds the level of output at which marginal revenue equals marginal cost. 
B)  exceeds the level of output at which marginal cost equals average total cost. 
C)  falls short of the level of output at which price equals marginal cost. 
D)  exceeds the firm's efficient scale of output. 
A)  exceeds the level of output at which marginal revenue equals marginal cost. 
B)  exceeds the level of output at which marginal cost equals average total cost. 
C)  falls short of the level of output at which price equals marginal cost. 
D)  exceeds the firm's efficient scale of output.

Question 8

The theory of monopolistic competition is somewhat disappointing in that it fails to

Accepted Answer

A)  pinpoint a profit-maximizing level of output for monopolistically competitive firms. 
B)  yield simple and compelling advice for public policy. 
C)  explain why product differentiation is observed in monopolistically competitive markets. 
D)  explain why monopolistically competitive firms have excess capacity. 
A)  pinpoint a profit-maximizing level of output for monopolistically competitive firms. 
B)  yield simple and compelling advice for public policy. 
C)  explain why product differentiation is observed in monopolistically competitive markets. 
D)  explain why monopolistically competitive firms have excess capacity.

Question 9

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

Accepted Answer

A) True 
 B)False

Question 10

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Accepted Answer

The answer of Due to free entry and exit in...

Question 11

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

Accepted Answer

A) True 
 B)False

Question 12

A monopolistically competitive firm chooses the quantity to produce where

Accepted Answer

A)  price equals marginal cost. 
B)  demand equals marginal cost. 
C)  marginal revenue equals marginal cost. 
D)  Both a and c are correct. 
A)  price equals marginal cost. 
B)  demand equals marginal cost. 
C)  marginal revenue equals marginal cost. 
D)  Both a and c are correct.

Question 13

Figure 16-10
The figure is drawn for a monopolistically-competitive firm.  
-Refer to Figure 16-10. When the firm is maximizing its profit,

Accepted Answer

A)  TR = $9,000 and TC =$16,000. 
B)  TR = $14,000 and TC =$16,000. 
C)  TR = $16,000 and TC =$16,000. 
D)  MC exceeds MR by $66.66 on the last unit of output produced. 
A)  TR = $9,000 and TC =$16,000. 
B)  TR = $14,000 and TC =$16,000. 
C)  TR = $16,000 and TC =$16,000. 
D)  MC exceeds MR by $66.66 on the last unit of output produced.

Question 14

In the study done by Lee Benham on advertising for eyeglasses,

Accepted Answer

A)  advertising increased the average price. 
B)  advertising decreased the average price. 
C)  there was no difference in price, but quality was better in the states that didn't allow advertising. 
D)  advertising appeared to have no effect whatsoever in the states that permitted advertising. 
A)  advertising increased the average price. 
B)  advertising decreased the average price. 
C)  there was no difference in price, but quality was better in the states that didn't allow advertising. 
D)  advertising appeared to have no effect whatsoever in the states that permitted advertising.

Question 15

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 16

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this market?

Accepted Answer

A)  $60 
B)  $70 
C)  $75 
D)  $80 
A)  $60 
B)  $70 
C)  $75 
D)  $80

Question 17

In a long-run equilibrium, both perfectly competitive markets and monopolistically competitive markets have price equal to average total cost.

Accepted Answer

A) True 
 B)False

Question 18

Figure 16-13  
-Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

Accepted Answer

The answer of Figure 16-13  
-Refer to Figure 16-13....

Question 19

Figure 16-5  
-Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Accepted Answer

A)  panel a 
B)  panel b 
C)  panel c 
D)  panel d 
A)  panel a 
B)  panel b 
C)  panel c 
D)  panel d

Question 20

Which two curves are tangent to each other in a monopolistically competitive market with zero economic profit?

Accepted Answer

A)  demand and average variable cost 
B)  demand and average total cost 
C)  marginal revenue and average variable cost 
D)  marginal revenue and average total cost 
A)  demand and average variable cost 
B)  demand and average total cost 
C)  marginal revenue and average variable cost 
D)  marginal revenue and average total cost

Exam 16: Monopolistic Competition

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Figure 16-12 -Refer to Figure 16-12. How much excess capacity does this firm have?

Which of the following correctly lists the products in order from most advertised to least advertised?

The two types of imperfectly competitive markets are

Describe the shape of the monopolistically competitive firm's demand curve.

Figure 16-5 -Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

The theory of monopolistic competition is somewhat disappointing in that it fails to

The claim that advertising reduces the elasticity of demand is likely to be made by a defender of advertising.

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

A monopolistically competitive firm chooses the quantity to produce where

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. When the firm is maximizing its profit,

In the study done by Lee Benham on advertising for eyeglasses,

Which market structure would likely have the highest concentration ratio?

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this market?

In a long-run equilibrium, both perfectly competitive markets and monopolistically competitive markets have price equal to average total cost.

Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

Figure 16-5 -Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will not encourage either the entry or exit of firms in a monopolistically competitive industry?

Which two curves are tangent to each other in a monopolistically competitive market with zero economic profit?

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

Filters