Question 1

In the long-run,a firm in monopolistic competition produces at an output level where

Accepted Answer

A)  P > ATC and MR = MC. 
B)  P > ATC and MR > MC. 
C)  P = ATC and MR = MC. 
D)  P = ATC and MR > MC. 
E)  P = ATC and MC = ATC. 
A)  P > ATC and MR = MC. 
B)  P > ATC and MR > MC. 
C)  P = ATC and MR = MC. 
D)  P = ATC and MR > MC. 
E)  P = ATC and MC = ATC.

Question 2

Entry and exit continue in monopolistic competition until the remaining firms are

Accepted Answer

A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making less than a normal profit. 
D)  making zero economic profit. 
E)  producing the normal amount of product differentiation. 
A)  making an economic profit. 
B)  incurring an economic loss. 
C)  making less than a normal profit. 
D)  making zero economic profit. 
E)  producing the normal amount of product differentiation.

Question 3

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Accepted Answer

A)  fixed cost 
B)  average total cost 
C)  average variable cost 
D)  average fixed cost 
E)  marginal cost 
A)  fixed cost 
B)  average total cost 
C)  average variable cost 
D)  average fixed cost 
E)  marginal cost

Question 4

A firm's markup is
A) the difference between average total cost with and without advertising.
B) the difference between demand and marginal revenue.
C) a signal of product quality.
D) the difference between price and marginal cost.
E) the result of producing less than the efficient scale.

Accepted Answer

The answer of A firm's markup is
A) the difference between...

Question 5

-Suppose there are ten firms that occupy the Odell,Oregon cherry pie market.The market share of each firm is listed in the above table.
a.What is the Herfindahl-Hirschman Index for this market?
b.If Firm H and Firm A merge,what is the new Herfindahl-Hirschman Index for this market?
c.A severe winter causes every firm except A,B,and E to close.With only these three firms operating,Firm A's market share is 71 percent,Firm B's market share is 23 percent,and Firm C's market share is 6 percent.What is the Herfindahl-Hirschman Index for this market now?

Accepted Answer

a.The Herfindahl-Hirschman Ind

Question 6

Monopolistic competition is a market structure in which

Accepted Answer

A)  firms face barriers to entry. 
B)  a large number of firms compete. 
C)  firms produce and sell an identical product. 
D)  firms face perfectly elastic demand for their product. 
E)  the firms have no ability to influence the price of their product. 
A)  firms face barriers to entry. 
B)  a large number of firms compete. 
C)  firms produce and sell an identical product. 
D)  firms face perfectly elastic demand for their product. 
E)  the firms have no ability to influence the price of their product.

Question 7

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Accepted Answer

A)  its marginal revenue is less than $3.56. 
B)  its marginal revenue is equal to $3.56. 
C)  its marginal revenue is more than $3.56. 
D)  average total cost is less than $3.56. 
E)  Both answers A and D are correct. 
A)  its marginal revenue is less than $3.56. 
B)  its marginal revenue is equal to $3.56. 
C)  its marginal revenue is more than $3.56. 
D)  average total cost is less than $3.56. 
E)  Both answers A and D are correct.

Question 8

Which of the following is correct?

Accepted Answer

A)  Monopoly has a four-firm concentration ratio of 100. 
B)  Perfect competition has a four-firm concentration ratio near zero. 
C)  Monopolistic competition has a four-firm concentration ratio of more than 40. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  Monopoly has a four-firm concentration ratio of 100. 
B)  Perfect competition has a four-firm concentration ratio near zero. 
C)  Monopolistic competition has a four-firm concentration ratio of more than 40. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 9

Which of the following characterize a firm in monopolistic competition in the long run?
i.operating at the minimum efficient scale
ii.markups of price over marginal cost
iii.zero economic profit

Accepted Answer

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

Question 10

Which of the following is the best example of a monopolistically competitive industry?

Accepted Answer

A)  land-based long distance telephone service 
B)  wheat farming 
C)  the local electricity producer 
D)  manufacturing of shirts 
E)  cable television 
A)  land-based long distance telephone service 
B)  wheat farming 
C)  the local electricity producer 
D)  manufacturing of shirts 
E)  cable television

Question 11

-The figure above shows Firm X.The ________ firm charges a markup of ________.

Accepted Answer

A)  monopolistically competitive; $10 per unit because price exceeds marginal cost 
B)  monopolistically competitive; $20 per unit because prices exceeds average total cost 
C)  perfectly competitive; $10 per unit because price equals average total cost 
D)  perfectly competitive; $20 per unit because price exceeds average total cost 
E)  monopolistically competitive; $10 per unit because the demand curve lies above the marginal revenue curve 
A)  monopolistically competitive; $10 per unit because price exceeds marginal cost 
B)  monopolistically competitive; $20 per unit because prices exceeds average total cost 
C)  perfectly competitive; $10 per unit because price equals average total cost 
D)  perfectly competitive; $20 per unit because price exceeds average total cost 
E)  monopolistically competitive; $10 per unit because the demand curve lies above the marginal revenue curve

Question 12

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

Accepted Answer

In order to maintain (or regain)economic

Question 13

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

Accepted Answer

The additional selling costs from produc

Question 14

When firms in monopolistic competition are making an economic profit,firms will

Accepted Answer

A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
E)  enter the industry and then will exit the industry. 
A)  enter the industry, and demand will increase for the original firms. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will decrease for the original firms. 
E)  enter the industry and then will exit the industry.

Question 15

When firms in monopolistic competition incur an economic loss,some firms will

Accepted Answer

A)  enter the industry and produce more products. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will become more elastic for the original firms. 
E)  exit the industry and other firms will enter. 
A)  enter the industry and produce more products. 
B)  exit the industry, and demand will increase for the firms that remain. 
C)  exit the industry, and demand will decrease for the firms that remain. 
D)  enter the industry, and demand will become more elastic for the original firms. 
E)  exit the industry and other firms will enter.

Question 16

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

Accepted Answer

A)  2 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  50 percent 
A)  2 percent 
B)  31 percent 
C)  78 percent 
D)  100 percent 
E)  50 percent

Question 17

The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-As long as the firm illustrated above remains open,it will set a price of ________ per month and it will ________.

Accepted Answer

A)  $50; make an economic profit 
B)  $50; incur an economic loss 
C)  $40; make an economic profit 
D)  $40; incur an economic loss 
E)  less than $20; incur an economic loss 
A)  $50; make an economic profit 
B)  $50; incur an economic loss 
C)  $40; make an economic profit 
D)  $40; incur an economic loss 
E)  less than $20; incur an economic loss

Question 18

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

Accepted Answer

A)  maximize; make zero economic profit 
B)  not maximize; make zero economic profit anyway 
C)  maximize; make an economic profit 
D)  not maximize; make an economic profit anyway 
E)  not maximize; incur an economic loss 
A)  maximize; make zero economic profit 
B)  not maximize; make zero economic profit anyway 
C)  maximize; make an economic profit 
D)  not maximize; make an economic profit anyway 
E)  not maximize; incur an economic loss

Question 19

The firm illustrated above is

Accepted Answer

A)  making an economic profit of $400,000 per month. 
B)  making an economic profit of $2,000,000 per month. 
C)  making an economic profit of $1,600,000 per month. 
D)  incurring an economic loss of $400,000 per month. 
E)  incurring an economic loss of $1,600,000 per month. 
A)  making an economic profit of $400,000 per month. 
B)  making an economic profit of $2,000,000 per month. 
C)  making an economic profit of $1,600,000 per month. 
D)  incurring an economic loss of $400,000 per month. 
E)  incurring an economic loss of $1,600,000 per month.

Question 20

-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

In the long-run,a firm in monopolistic competition produces at an output level where

Entry and exit continue in monopolistic competition until the remaining firms are

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

A firm's markup is A) the difference between average total cost with and without advertising. B) the difference between demand and marginal revenue. C) a signal of product quality. D) the difference between price and marginal cost. E) the result of producing less than the efficient scale.

Monopolistic competition is a market structure in which

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Which of the following is correct?

Which of the following characterize a firm in monopolistic competition in the long run? i.operating at the minimum efficient scale ii.markups of price over marginal cost iii.zero economic profit

Which of the following is the best example of a monopolistically competitive industry?

-The figure above shows Firm X.The firm charges a markup of .

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

When firms in monopolistic competition are making an economic profit,firms will

When firms in monopolistic competition incur an economic loss,some firms will

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of per month and it will .

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will his profit and will .

The firm illustrated above is

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

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 17: Monopolistic Competition

In the long-run,a firm in monopolistic competition produces at an output level where

Entry and exit continue in monopolistic competition until the remaining firms are

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

A firm's markup is A) the difference between average total cost with and without advertising. B) the difference between demand and marginal revenue. C) a signal of product quality. D) the difference between price and marginal cost. E) the result of producing less than the efficient scale.

Monopolistic competition is a market structure in which

If a monopolistically competitive seller's marginal cost is $3.56,the firm will increase its output if

Which of the following is correct?

Which of the following characterize a firm in monopolistic competition in the long run? i.operating at the minimum efficient scale ii.markups of price over marginal cost iii.zero economic profit

Which of the following is the best example of a monopolistically competitive industry?

-The figure above shows Firm X.The ________ firm charges a markup of ________.

Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

Explain how selling costs in monopolistic competition affect the efficiency of monopolistic competition.

When firms in monopolistic competition are making an economic profit,firms will

When firms in monopolistic competition incur an economic loss,some firms will

Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of ________ per month and it will ________.

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

The firm illustrated above is

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

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows Firm X.The firm charges a markup of .

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -As long as the firm illustrated above remains open,it will set a price of per month and it will .

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will his profit and will .