Question 1

Figure 16-4  
-Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

Accepted Answer

A)  will increase its profits if it raises its price and reduces its production level. 
B)  will increase its profits if it lowers its price and expands its production level. 
C)  is maximizing profits. 
D)  will increase its profits if it raises its prices and expands its production level. 
A)  will increase its profits if it raises its price and reduces its production level. 
B)  will increase its profits if it lowers its price and expands its production level. 
C)  is maximizing profits. 
D)  will increase its profits if it raises its prices and expands its production level.

Question 2

Which of the following goods are likely to be sold in a monopolistically competitive market?

Accepted Answer

A)  jeans 
B)  breakfast cereal 
C)  electricity distribution in Chicago 
D)  postage stamps 
A)  jeans 
B)  breakfast cereal 
C)  electricity distribution in Chicago 
D)  postage stamps

Question 3

Economists measure a market's domination by a small number of firms with a statistic called the

Accepted Answer

concentrat

Question 4

Entry and exit drive each firm in a monopolistically competitive market to a point of tangency between its

Accepted Answer

A)  marginal revenue curve and its total cost curve. 
B)  marginal revenue curve and its average total cost curve. 
C)  demand curve and its total cost curve. 
D)  demand curve and its average total cost curve. 
A)  marginal revenue curve and its total cost curve. 
B)  marginal revenue curve and its average total cost curve. 
C)  demand curve and its total cost curve. 
D)  demand curve and its average total cost curve.

Question 5

When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,

Accepted Answer

A)  its average revenue will equal its marginal cost. 
B)  its marginal revenue will exceed its marginal cost. 
C)  it will be earning positive economic profits. 
D)  its demand curve will be tangent to its average total cost curve. 
A)  its average revenue will equal its marginal cost. 
B)  its marginal revenue will exceed its marginal cost. 
C)  it will be earning positive economic profits. 
D)  its demand curve will be tangent to its average total cost curve.

Question 6

The government of Italy will not allow any Hard Rock Cafe restaurants to open in Italy. Defenders of the efficiency of brand-name markets would argue that this has hindered restaurant market efficiency in Italy.

Accepted Answer

A) True 
 B)False

Question 7

In a long-run equilibrium, a firm in a monopolistically competitive market operates

Accepted Answer

A)  where marginal revenue is zero. 
B)  where marginal revenue is negative. 
C)  on the rising portion of its average total cost curve. 
D)  on the declining portion of its average total cost curve. 
A)  where marginal revenue is zero. 
B)  where marginal revenue is negative. 
C)  on the rising portion of its average total cost curve. 
D)  on the declining portion of its average total cost curve.

Question 8

Figure 16-5  
-Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is

Accepted Answer

A)  earning zero economic profit. 
B)  likely to exit the market in the long run. 
C)  producing its efficient scale of output. 
D)  not maximizing its profit. 
A)  earning zero economic profit. 
B)  likely to exit the market in the long run. 
C)  producing its efficient scale of output. 
D)  not maximizing its profit.

Question 9

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.  
-Refer to Table 16-2. What is the concentration ratio for Industry M?

Accepted Answer

A)  about 96% 
B)  about 52% 
C)  about 40% 
D)  about 22% 
A)  about 96% 
B)  about 52% 
C)  about 40% 
D)  about 22%

Question 10

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

Accepted Answer

A)  there are too few firms to reach an efficient level of production. 
B)  firms do not operate at the output that minimizes average costs. 
C)  more advertising is needed to inform customers about product differences. 
D)  consumers do not have enough choice among the product varieties available. 
A)  there are too few firms to reach an efficient level of production. 
B)  firms do not operate at the output that minimizes average costs. 
C)  more advertising is needed to inform customers about product differences. 
D)  consumers do not have enough choice among the product varieties available.

Question 11

Figure 16-5  
-Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from 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 12

For a profit-maximizing monopolistically competitive firm, marginal revenue exceeds marginal cost in

Accepted Answer

A)  the short run but not in the long run. 
B)  the long run but not in the short run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run. 
A)  the short run but not in the long run. 
B)  the long run but not in the short run. 
C)  both the short run and the long run. 
D)  neither the short run nor the long run.

Question 13

Professional organizations (for example, the American Medical Association and the American Bar Association) have been active advocates for regulation to restrict the right of professionals to advertise. Describe what economic incentives might exist for existing professionals to restrict advertising.

Accepted Answer

If advertising increases information abo

Question 14

Figure 16-3
This figure depicts a situation in a monopolistically competitive market.  
-Refer to Figure 16-3. What is the profit-maximizing price, quantity, and resulting profit?

Accepted Answer

A)  P=$60, Q=20 units, profit=$200 
B)  P=$80, Q=20 units, profit=$200 
C)  P=$75, Q=25 units, profit=$100 
D)  P=$60, Q=40 units, profit=$0 
A)  P=$60, Q=20 units, profit=$200 
B)  P=$80, Q=20 units, profit=$200 
C)  P=$75, Q=25 units, profit=$100 
D)  P=$60, Q=40 units, profit=$0

Question 15

Figure 16-13  
-Refer to Figure 16-13. Use the letters to identify the deadweight loss associated with this firm's profit­maximizing production.

Accepted Answer

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

Question 16

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.  
-Refer to Table 16-3. Which industry has the highest concentration ratio?

Accepted Answer

A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D 
A)  Industry A 
B)  Industry B 
C)  Industry C 
D)  Industry D

Question 17

A monopolistically competitive market has characteristics that are similar to

Accepted Answer

A)  a monopoly only. 
B)  a competitive firm only. 
C)  both a monopoly and a competitive firm. 
D)  neither a monopoly nor a competitive firm. 
A)  a monopoly only. 
B)  a competitive firm only. 
C)  both a monopoly and a competitive firm. 
D)  neither a monopoly nor a competitive firm.

Question 18

Figure 16-13  
-Refer to Figure 16-13. Which letter represents the profit-maximizing quantity?

Accepted Answer

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

Question 19

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

Accepted Answer

A)  are price takers while competitive firms are not. 
B)  can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make. 
C)  sell completely unrelated products while competitive firms do not. 
D)  sell their product at a price equal to marginal cost while competitive firms do not. 
A)  are price takers while competitive firms are not. 
B)  can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make. 
C)  sell completely unrelated products while competitive firms do not. 
D)  sell their product at a price equal to marginal cost while competitive firms do not.

Question 20

Scenario 16-4
Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition.
-Refer to Scenario 16-4. As a result of the new restaurant, diners in Boston are likely to experience a

Accepted Answer

A)  product-variety externality, which is a negative externality. 
B)  product-variety externality, which is a positive externality. 
C)  business-stealing externality, which is a negative externality. 
D)  business-stealing externality, which is a positive externality. 
A)  product-variety externality, which is a negative externality. 
B)  product-variety externality, which is a positive externality. 
C)  business-stealing externality, which is a negative externality. 
D)  business-stealing externality, which is a positive externality.

Exam 16: Monopolistic Competition

Figure 16-4 -Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm

Which of the following goods are likely to be sold in a monopolistically competitive market?

Economists measure a market's domination by a small number of firms with a statistic called the

Entry and exit drive each firm in a monopolistically competitive market to a point of tangency between its

When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,

The government of Italy will not allow any Hard Rock Cafe restaurants to open in Italy. Defenders of the efficiency of brand-name markets would argue that this has hindered restaurant market efficiency in Italy.

In a long-run equilibrium, a firm in a monopolistically competitive market operates

Figure 16-5 -Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. What is the concentration ratio for Industry M?

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

Figure 16-5 -Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

For a profit-maximizing monopolistically competitive firm, marginal revenue exceeds marginal cost in

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. What is the profit-maximizing price, quantity, and resulting profit?

Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the deadweight loss associated with this firm's profit­maximizing production.

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. Which industry has the highest concentration ratio?

A monopolistically competitive market has characteristics that are similar to

Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing quantity?

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

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

Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the deadweight loss associated with this firm's profitmaximizing production.