Question 1

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

Accepted Answer

A) $20 
B) $30 
C) $40 
D) $50 
E) $10 
A) $20 
B) $30 
C) $40 
D) $50 
E) $10

Question 2

-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

Accepted Answer

Industry A has a four-firm concentration

Question 3

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes ________ temporarily and economic profit ________.

Accepted Answer

A) more elastic;decreases 
B) less elastic;increases 
C) more elastic;increases 
D) less elastic;decreases 
E) unit elastic;increases 
A) more elastic;decreases 
B) less elastic;increases 
C) more elastic;increases 
D) less elastic;decreases 
E) unit elastic;increases

Question 4

In long-run equilibrium,a firm in monopolistic competition makes

Accepted Answer

A) an economic profit,but the economic profit is less than it would be if the firm was a monopoly. 
B) an economic profit that is higher than what it would be if the firm was a monopoly. 
C) zero economic profit. 
D) an economic profit that is the same amount as it would be if the firm was a monopoly. 
E) an economic profit,an economic loss,or zero economic profit. 
A) an economic profit,but the economic profit is less than it would be if the firm was a monopoly. 
B) an economic profit that is higher than what it would be if the firm was a monopoly. 
C) zero economic profit. 
D) an economic profit that is the same amount as it would be if the firm was a monopoly. 
E) an economic profit,an economic loss,or zero economic profit.

Question 5

The major difference between monopolistic competition and monopoly is

Accepted Answer

A) monopoly is a price setter and a firm in monopolistic competition is a price taker. 
B) only a monopoly can earn an economic profit in the long run. 
C) only a firm in monopolistic competition can earn an economic profit in the short run. 
D) how the quantity of output is determined. 
E) only firms in monopolistic competition are protected by barriers to entry. 
A) monopoly is a price setter and a firm in monopolistic competition is a price taker. 
B) only a monopoly can earn an economic profit in the long run. 
C) only a firm in monopolistic competition can earn an economic profit in the short run. 
D) how the quantity of output is determined. 
E) only firms in monopolistic competition are protected by barriers to entry.

Question 6

Advertising costs

Accepted Answer

A) make the marginal revenue more elastic. 
B) shift the ATC curve upward. 
C) shift the marginal cost curve rightward. 
D) indirectly shift the marginal cost curve upward. 
E) affect the marginal cost but not the total cost. 
A) make the marginal revenue more elastic. 
B) shift the ATC curve upward. 
C) shift the marginal cost curve rightward. 
D) indirectly shift the marginal cost curve upward. 
E) affect the marginal cost but not the total cost.

Question 7

What is the dilemma faced by firms in oligopoly?

Accepted Answer

Because there are just a few large firms

Question 8

-The figure above shows the market demand curve for a market with three firms.It also shows a firm's marginal cost curve.In this oligopoly,what is the range of output and prices? Why does this range of outcomes exist?

Accepted Answer

If the firms operate as a monopoly,they

Question 9

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit ________ and the first firm's profit ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change

Question 10

If two duopolists can stick to a cartel agreement to boost their prices,then both

Accepted Answer

A) earn greater profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude. 
A) earn greater profits than if they did not collude. 
B) price at marginal cost. 
C) price below average total cost. 
D) decrease their economic profits. 
E) increase their production so that each produces more than if they did not collude.

Question 11

The darkened area in the figure above is the

Accepted Answer

A) deadweight loss. 
B) firm's economic loss. 
C) consumer surplus. 
D) firm's total cost. 
E) firm's total revenue. 
A) deadweight loss. 
B) firm's economic loss. 
C) consumer surplus. 
D) firm's total cost. 
E) firm's total revenue.

Question 12

Because of the number of firms in monopolistic competition,

Accepted Answer

A) each firm has a large market share. 
B) it is possible for the firms to collude. 
C) no one firm can dominate the market. 
D) one firm has the ability to dictate market conditions. 
E) each firm must carefully monitor what its competitors do. 
A) each firm has a large market share. 
B) it is possible for the firms to collude. 
C) no one firm can dominate the market. 
D) one firm has the ability to dictate market conditions. 
E) each firm must carefully monitor what its competitors do.

Question 13

Firms decide how much to spend on product development and marketing by

Accepted Answer

A) spending the same amount as they did in previous years. 
B) spending the historical average of 1/4 of total production cost. 
C) determining what it will take to eliminate excess capacity. 
D) balancing the cost and the benefit of product development and marketing. 
E) ensuring that the marginal cost of product development and marketing is less than or equal to the marginal cost of producing the good or service. 
A) spending the same amount as they did in previous years. 
B) spending the historical average of 1/4 of total production cost. 
C) determining what it will take to eliminate excess capacity. 
D) balancing the cost and the benefit of product development and marketing. 
E) ensuring that the marginal cost of product development and marketing is less than or equal to the marginal cost of producing the good or service.

Question 14

List four characteristics of monopolistic competition.

Accepted Answer

There are a large number of firms;each p

Question 15

When weighing the efficiency of monopolistic competition,which of the following should be considered?
I.The information provided by advertising
Ii.Product variety
Iii.The extra cost of excess capacity

Accepted Answer

A) ii only 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) iii only 
A) ii only 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) iii only

Question 16

Monopolistic competition is judged to be economically inefficient because

Accepted Answer

A) the price is greater than marginal cost. 
B) firms earn zero economic profit in the long run. 
C) marginal revenue equals marginal cost. 
D) firms have deficient capacity in the long run. 
E) firms earn an economic profit in the long run. 
A) the price is greater than marginal cost. 
B) firms earn zero economic profit in the long run. 
C) marginal revenue equals marginal cost. 
D) firms have deficient capacity in the long run. 
E) firms earn an economic profit in the long run.

Question 17

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Accepted Answer

A four-firm concentration ratio is the p

Question 18

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

Accepted Answer

A) monopolistic competition 
B) oligopoly 
C) perfect competition 
D) monopoly 
E) legally protected monopoly 
A) monopolistic competition 
B) oligopoly 
C) perfect competition 
D) monopoly 
E) legally protected monopoly

Question 19

-The firm in the above figure has excess capacity of ________ meals per day.

Accepted Answer

A) 0 
B) between 1 and 10 
C) between 11 and 20 
D) more than 21 and 30 
E) more than 31 
A) 0 
B) between 1 and 10 
C) between 11 and 20 
D) more than 21 and 30 
E) more than 31

Question 20

-The above figure represents a restaurant operating in monopolistic competition.
a.What is the profit-maximizing level of output?
b.What price will the firm charge?
c.What is the firm's profit (or loss)?
d.Is this a long-run equilibrium? Why or why not?
e.Is this firm producing its efficient scale of output?

Accepted Answer

a.The quantity is 20 meals a day.
b.The

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes temporarily and economic profit .

In long-run equilibrium,a firm in monopolistic competition makes

The major difference between monopolistic competition and monopoly is

Advertising costs

What is the dilemma faced by firms in oligopoly?

-The figure above shows the market demand curve for a market with three firms.It also shows a firm's marginal cost curve.In this oligopoly,what is the range of output and prices? Why does this range of outcomes exist?

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit and the first firm's profit .

If two duopolists can stick to a cartel agreement to boost their prices,then both

The darkened area in the figure above is the

Because of the number of firms in monopolistic competition,

Firms decide how much to spend on product development and marketing by

List four characteristics of monopolistic competition.

When weighing the efficiency of monopolistic competition,which of the following should be considered? I.The information provided by advertising Ii.Product variety Iii.The extra cost of excess capacity

Monopolistic competition is judged to be economically inefficient because

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

-The firm in the above figure has excess capacity of ________ meals per day.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 13: Monopolistic Competition and Oligopoly

-The above figure shows a motel engaged in monopolistic competition with other motels.The equilibrium price at this motel is ________ per room.

-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes ________ temporarily and economic profit ________.

In long-run equilibrium,a firm in monopolistic competition makes

The major difference between monopolistic competition and monopoly is

Advertising costs

What is the dilemma faced by firms in oligopoly?

-The figure above shows the market demand curve for a market with three firms.It also shows a firm's marginal cost curve.In this oligopoly,what is the range of output and prices? Why does this range of outcomes exist?

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit ________ and the first firm's profit ________.

If two duopolists can stick to a cartel agreement to boost their prices,then both

The darkened area in the figure above is the

Because of the number of firms in monopolistic competition,

Firms decide how much to spend on product development and marketing by

List four characteristics of monopolistic competition.

When weighing the efficiency of monopolistic competition,which of the following should be considered? I.The information provided by advertising Ii.Product variety Iii.The extra cost of excess capacity

Monopolistic competition is judged to be economically inefficient because

What is the difference between a four-firm concentration ratio and a Herfindahl-Hirschman Index?

Daryl's Inc.has formed a cartel with the two other firms in its industry.In which of the following market structures does Daryl's operate?

-The firm in the above figure has excess capacity of ________ meals per day.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The shampoo industry is constantly coming out with new products.The reason is that when a firm introduces a new shampoo into the market,the demand for the shampoo becomes temporarily and economic profit .

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit and the first firm's profit .