Question 1

Concentration ratios

Accepted Answer

A)  refer to the concentration of customers in a certain area. 
B)  measure whether the market is dominated by a small number of firms. 
C)  measure the concentration of a large number of firms in a certain area. 
D)  have high values for perfect competition. 
E)  measure how concentrated a firm's sales are among certain types of goods. 
A)  refer to the concentration of customers in a certain area. 
B)  measure whether the market is dominated by a small number of firms. 
C)  measure the concentration of a large number of firms in a certain area. 
D)  have high values for perfect competition. 
E)  measure how concentrated a firm's sales are among certain types of goods.

Question 2

How do product development and marketing affect a firm in monopolistic competition?

Accepted Answer

Product development and marketing have t

Question 3

Which of the following is an advantage to society of monopolistic competition?

Accepted Answer

A)  production at the lowest possible average cost 
B)  product variety 
C)  Only essential costs are incurred. 
D)  long-run profitability 
E)  The firms have excess capacity so they are always willing to increase their production. 
A)  production at the lowest possible average cost 
B)  product variety 
C)  Only essential costs are incurred. 
D)  long-run profitability 
E)  The firms have excess capacity so they are always willing to increase their production.

Question 4

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

Accepted Answer

A)  3,600. 
B)  100. 
C)  625. 
D)  25. 
E)  2,500. 
A)  3,600. 
B)  100. 
C)  625. 
D)  25. 
E)  2,500.

Question 5

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Accepted Answer

A)  less than 150 
B)  between 151 and 250 
C)  between 251 and 350 
D)  between 451 and 450 
E)  more than 451 
A)  less than 150 
B)  between 151 and 250 
C)  between 251 and 350 
D)  between 451 and 450 
E)  more than 451

Question 6

Which of the following is correct?

Accepted Answer

A)  A firm in monopolistic competition does not have excess capacity in the long run. 
B)  A firm in perfect competition operates at maximum average total cost in the long run. 
C)  In the long run, a firm in monopolistic competition maximizes its profit at a point where price is equal to average total cost but the average total cost is not minimized. 
D)  In the long run, a firm in monopolistic competition makes zero economic profit and its price is equal to the minimum average total cost. 
E)  In the long run, a firm in monopolistic competition can make an economic profit because of product differentiation. 
A)  A firm in monopolistic competition does not have excess capacity in the long run. 
B)  A firm in perfect competition operates at maximum average total cost in the long run. 
C)  In the long run, a firm in monopolistic competition maximizes its profit at a point where price is equal to average total cost but the average total cost is not minimized. 
D)  In the long run, a firm in monopolistic competition makes zero economic profit and its price is equal to the minimum average total cost. 
E)  In the long run, a firm in monopolistic competition can make an economic profit because of product differentiation.

Question 7

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 make an economic profit in the long run. 
C)  only a firm in monopolistic competition can make 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 make an economic profit in the long run. 
C)  only a firm in monopolistic competition can make 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 8

The clothing industry has many firms with differentiated products and no barriers to entry.The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry.The food industry is characterized as ________,and the cereal industry is characterized as ________.

Accepted Answer

A)  perfect competition; monopolistic competition 
B)  monopolistic competition; oligopoly 
C)  oligopoly; monopolistic competition 
D)  perfect competition; perfect competition 
E)  monopolistic competition; monopoly 
A)  perfect competition; monopolistic competition 
B)  monopolistic competition; oligopoly 
C)  oligopoly; monopolistic competition 
D)  perfect competition; perfect competition 
E)  monopolistic competition; monopoly

Question 9

The decision to innovate

Accepted Answer

A)  depends on the marketing department's needs. 
B)  depends on whether the firm wants to benefit its customers. 
C)  is based on the marginal cost and the marginal revenue of innovation. 
D)  is unnecessary in a monopolistically competitive market. 
E)  None of the above answers is correct. 
A)  depends on the marketing department's needs. 
B)  depends on whether the firm wants to benefit its customers. 
C)  is based on the marginal cost and the marginal revenue of innovation. 
D)  is unnecessary in a monopolistically competitive market. 
E)  None of the above answers is correct.

Question 10

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is

Accepted Answer

A)  a monopoly. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  perfect competition. 
E)  oligopolistic monopoly. 
A)  a monopoly. 
B)  monopolistic competition. 
C)  oligopoly. 
D)  perfect competition. 
E)  oligopolistic monopoly.

Question 11

In which of the following ways do advertising and other selling costs affect a firm's cost curves?
i.Advertising expenditures increase total fixed costs.
ii.Selling costs increase total fixed costs.
iii.Advertising and other selling costs per unit of output decrease as output increases.

Accepted Answer

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

Question 12

A firm in monopolistic competition definitely incurs an economic loss if

Accepted Answer

A)  price equals marginal revenue. 
B)  price is less than average total cost. 
C)  marginal revenue equals marginal cost. 
D)  marginal revenue is less than average total cost. 
E)  price is greater than marginal cost. 
A)  price equals marginal revenue. 
B)  price is less than average total cost. 
C)  marginal revenue equals marginal cost. 
D)  marginal revenue is less than average total cost. 
E)  price is greater than marginal cost.

Question 13

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

Accepted Answer

A)  supply and demand. 
B)  efficiency and equity. 
C)  internal and external economies of scale. 
D)  price and the quantity it can sell. 
E)  its marginal revenue and its price. 
A)  supply and demand. 
B)  efficiency and equity. 
C)  internal and external economies of scale. 
D)  price and the quantity it can sell. 
E)  its marginal revenue and its price.

Question 14

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

Accepted Answer

A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20 
A)  1850 
B)  2000 
C)  6400 
D)  100 
E)  20

Question 15

The marginal revenue curve facing a monopolistically competitive firm

Accepted Answer

A)  lies on its demand curve. 
B)  lies above its demand curve. 
C)  lies below its demand curve. 
D)  is equal to its price curve. 
E)  is parallel to its demand curve. 
A)  lies on its demand curve. 
B)  lies above its demand curve. 
C)  lies below its demand curve. 
D)  is equal to its price curve. 
E)  is parallel to its demand curve.

Question 16

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct.In mo

Question 17

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

Accepted Answer

A)  a monopoly. 
B)  monopolistic competition. 
C)  an oligopoly. 
D)  perfect competition. 
E)  oligopolistic competition. 
A)  a monopoly. 
B)  monopolistic competition. 
C)  an oligopoly. 
D)  perfect competition. 
E)  oligopolistic competition.

Question 18

In both monopolistic competition and perfect competition,

Accepted Answer

A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same. 
A)  firms sell identical products. 
B)  there is easy entry and exit. 
C)  firms are price takers. 
D)  firms face horizontal demand curves. 
E)  the marginal revenue curve and the demand curve are the same.

Question 19

If firms in monopolistic competition are making economic profits,then

Accepted Answer

A)  they can expect to earn the profits indefinitely. 
B)  new rivals enter the industry and the demand for any seller's good decreases. 
C)  the market demand becomes more inelastic. 
D)  the industry is in long-run equilibrium. 
E)  new rivals enter the industry and the demand for any seller's good increases. 
A)  they can expect to earn the profits indefinitely. 
B)  new rivals enter the industry and the demand for any seller's good decreases. 
C)  the market demand becomes more inelastic. 
D)  the industry is in long-run equilibrium. 
E)  new rivals enter the industry and the demand for any seller's good increases.

Question 20

In monopolistic competition,a firm can set the price for its product because of

Accepted Answer

A)  easy entry and exit. 
B)  economic profits. 
C)  product differentiation. 
D)  many competitors. 
E)  the firm's upward sloping demand curve. 
A)  easy entry and exit. 
B)  economic profits. 
C)  product differentiation. 
D)  many competitors. 
E)  the firm's upward sloping demand curve.

Concentration ratios

How do product development and marketing affect a firm in monopolistic competition?

Which of the following is an advantage to society of monopolistic competition?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Which of the following is correct?

The major difference between monopolistic competition and monopoly is

The clothing industry has many firms with differentiated products and no barriers to entry.The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry.The food industry is characterized as ,and the cereal industry is characterized as .

The decision to innovate

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is

In which of the following ways do advertising and other selling costs affect a firm's cost curves? i.Advertising expenditures increase total fixed costs. ii.Selling costs increase total fixed costs. iii.Advertising and other selling costs per unit of output decrease as output increases.

A firm in monopolistic competition definitely incurs an economic loss if

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

The marginal revenue curve facing a monopolistically competitive firm

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

In both monopolistic competition and perfect competition,

If firms in monopolistic competition are making economic profits,then

In monopolistic competition,a firm can set the price for its product because of

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

Concentration ratios

How do product development and marketing affect a firm in monopolistic competition?

Which of the following is an advantage to society of monopolistic competition?

Each of the four firms in an industry has a market share of 25 percent.The Herfindahl-Hirschman Index equals

-The above figure shows a restaurant engaged in monopolistic competition with other restaurants.The equilibrium quantity at this restaurant is ________ meals per day.

Which of the following is correct?

The major difference between monopolistic competition and monopoly is

The decision to innovate

The United Company competes with many other firms each producing slightly different products.Firms freely enter and exit this industry.The type of industry United Company operates in is

In which of the following ways do advertising and other selling costs affect a firm's cost curves? i.Advertising expenditures increase total fixed costs. ii.Selling costs increase total fixed costs. iii.Advertising and other selling costs per unit of output decrease as output increases.

A firm in monopolistic competition definitely incurs an economic loss if

As a firm in monopolistic competition sets the price for its product,the firm faces a tradeoff between

-Suppose there are 7 firms in the candy industry with the market shares shown above.What is the HHI for the industry?

The marginal revenue curve facing a monopolistically competitive firm

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

In both monopolistic competition and perfect competition,

If firms in monopolistic competition are making economic profits,then

In monopolistic competition,a firm can set the price for its product because of

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