Question 1

Advertising costs and other selling costs are

Accepted Answer

A)  efficient. 
B)  fixed costs. 
C)  variable costs. 
D)  marginal costs. 
E)  considered as part of demand because they affect the demand for the good. 
A)  efficient. 
B)  fixed costs. 
C)  variable costs. 
D)  marginal costs. 
E)  considered as part of demand because they affect the demand for the good.

Question 2

Advertising is a ________ cost that is incurred by ________.

Accepted Answer

A)  variable; monopolies 
B)  variable; perfectly competitive firms 
C)  fixed; perfectly competitive firms 
D)  fixed; monopolistically competitive firms 
E)  marginal; monopolistically competitive firms 
A)  variable; monopolies 
B)  variable; perfectly competitive firms 
C)  fixed; perfectly competitive firms 
D)  fixed; monopolistically competitive firms 
E)  marginal; monopolistically competitive firms

Question 3

It would be impossible for members of the fast-food industry to collude to fix prices because

Accepted Answer

A)  there are too many fast-food firms in the market. 
B)  fast food is not durable. 
C)  there are not enough fast-food firms in the market. 
D)  the price of fast-food is too low. 
E)  demanders would not buy from firms that collude. 
A)  there are too many fast-food firms in the market. 
B)  fast food is not durable. 
C)  there are not enough fast-food firms in the market. 
D)  the price of fast-food is too low. 
E)  demanders would not buy from firms that collude.

Question 4

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

Accepted Answer

A)  elasticity of demand value. 
B)  elasticity of supply value. 
C)  Herfindahl-Hirschman Index. 
D)  four-firm concentration ratio. 
E)  monopolistic concentration index. 
A)  elasticity of demand value. 
B)  elasticity of supply value. 
C)  Herfindahl-Hirschman Index. 
D)  four-firm concentration ratio. 
E)  monopolistic concentration index.

Question 5

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

Accepted Answer

A)  100. 
B)  4150. 
C)  25. 
D)  3450. 
E)  undefined because there are not 50 firms in the industry. 
A)  100. 
B)  4150. 
C)  25. 
D)  3450. 
E)  undefined because there are not 50 firms in the industry.

Question 6

Because economic profits are eliminated in the long run in monopolistic competition,to make an economic profit,firms continuously

Accepted Answer

A)  shut down. 
B)  exit the industry. 
C)  develop and market new products. 
D)  declare bankruptcy. 
E)  decrease their costs by decreasing their selling costs. 
A)  shut down. 
B)  exit the industry. 
C)  develop and market new products. 
D)  declare bankruptcy. 
E)  decrease their costs by decreasing their selling costs.

Question 7

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 8

-The above figure represents Tony's Pizza Parlor,a firm in monopolistic competition.
a.What quantity will be produced?
b.What price will be charged?
c.What is Tony's total cost?
d.What is Tony's total revenue?
e.What is Tony's economic profit or loss?
f.Is this a long-run equilibrium? Why or why not?

Accepted Answer

a.40 pizzas per day
b.$12.00 per pizza
c

Question 9

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

Accepted Answer

In the long run,a firm in monopolistic c

Question 10

The firm in the above figure has a markup of ________ per meal.

Accepted Answer

A)  $0 
B)  $4 
C)  $8 
D)  $10 
E)  more than $10 
A)  $0 
B)  $4 
C)  $8 
D)  $10 
E)  more than $10

Question 11

Product differentiation means

Accepted Answer

A)  firms sell products that are very dissimilar. 
B)  products sold by different firms are slightly different. 
C)  charging a higher price to consumers with high willingness to pay. 
D)  charging a lower price to consumers with low willingness to pay. 
E)  that a single firm sells many different types of products. 
A)  firms sell products that are very dissimilar. 
B)  products sold by different firms are slightly different. 
C)  charging a higher price to consumers with high willingness to pay. 
D)  charging a lower price to consumers with low willingness to pay. 
E)  that a single firm sells many different types of products.

Question 12

In monopolistic competition,there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

Accepted Answer

A)  high concentration, as indicated by the large concentration ratio 
B)  product differentiation 
C)  freedom of entry and exit 
D)  marginal cost rises as more output is produced 
E)  the fact there are many firms in the market 
A)  high concentration, as indicated by the large concentration ratio 
B)  product differentiation 
C)  freedom of entry and exit 
D)  marginal cost rises as more output is produced 
E)  the fact there are many firms in the market

Question 13

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

Accepted Answer

Both Coca-Cola and Pepsi Cola are among

Question 14

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

Accepted Answer

A)  profit 
B)  supply 
C)  total revenue 
D)  total cost 
E)  marginal cost 
A)  profit 
B)  supply 
C)  total revenue 
D)  total cost 
E)  marginal cost

Question 15

If a firm in monopolistic competition is making an economic profit,

Accepted Answer

A)  it is in the long run. 
B)  other firms can enter the market. 
C)  it can do so because it is "monopolistic" and other firms will have a hard time competing with it. 
D)  its average cost must exceed its marginal cost. 
E)  The question errs because firms in monopolistic competition cannot make an economic profit. 
A)  it is in the long run. 
B)  other firms can enter the market. 
C)  it can do so because it is "monopolistic" and other firms will have a hard time competing with it. 
D)  its average cost must exceed its marginal cost. 
E)  The question errs because firms in monopolistic competition cannot make an economic profit.

Question 16

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

Accepted Answer

A)  P = MC for both types of firms. 
B)  P = MR = MC for firms in perfect competition, and P > MR = MC for firms in monopolistic competition. 
C)  MR = MC for firms in perfect competition and MR > MC for firms in monopolistic competition. 
D)  P > MR = MC for firms in both perfect competition and monopolistic competition. 
E)  P = ATC always for firms in both perfect competition and monopolistic competition. 
A)  P = MC for both types of firms. 
B)  P = MR = MC for firms in perfect competition, and P > MR = MC for firms in monopolistic competition. 
C)  MR = MC for firms in perfect competition and MR > MC for firms in monopolistic competition. 
D)  P > MR = MC for firms in both perfect competition and monopolistic competition. 
E)  P = ATC always for firms in both perfect competition and monopolistic competition.

Question 17

To maximize its profit,the firm in the figure above will produce ________ jeans and set a price of ________ per pair of jeans.

Accepted Answer

A)  150; between $50 and $25 
B)  125; $25 
C)  125; $50 
D)  125; $75 
E)  None of the above answers is correct. 
A)  150; between $50 and $25 
B)  125; $25 
C)  125; $50 
D)  125; $75 
E)  None of the above answers is correct.

Question 18

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

Accepted Answer

A)  200 
B)  300 
C)  400 
D)  500 
E)  100 
A)  200 
B)  300 
C)  400 
D)  500 
E)  100

Question 19

Monopolistic competition is efficient when compared to

Accepted Answer

A)  perfect competition. 
B)  complete product uniformity. 
C)  the short run. 
D)  the long run. 
E)  None of the above answers is correct. 
A)  perfect competition. 
B)  complete product uniformity. 
C)  the short run. 
D)  the long run. 
E)  None of the above answers is correct.

Question 20

In the long run,a firm in monopolistic competition will

Accepted Answer

A)  produce so that its price equals marginal cost. 
B)  operate at the minimum of the long-run average cost. 
C)  overutilize its insufficient capacity. 
D)  produce so that its price equals average total cost. 
E)  be dependent on the other firms in the industry. 
A)  produce so that its price equals marginal cost. 
B)  operate at the minimum of the long-run average cost. 
C)  overutilize its insufficient capacity. 
D)  produce so that its price equals average total cost. 
E)  be dependent on the other firms in the industry.

Advertising costs and other selling costs are

Advertising is a cost that is incurred by .

It would be impossible for members of the fast-food industry to collude to fix prices because

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

Because economic profits are eliminated in the long run in monopolistic competition,to make an economic profit,firms continuously

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

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

The firm in the above figure has a markup of ________ per meal.

Product differentiation means

In monopolistic competition,there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

If a firm in monopolistic competition is making an economic profit,

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

To maximize its profit,the firm in the figure above will produce jeans and set a price of per pair of jeans.

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

Monopolistic competition is efficient when compared to

In the long run,a firm in monopolistic competition will

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

Advertising costs and other selling costs are

Advertising is a ________ cost that is incurred by ________.

It would be impossible for members of the fast-food industry to collude to fix prices because

If you have found the percentage of the value of total revenue accounted for by the four largest firms in an industry,you have found the

If there are four firms in an industry with market shares of 50 percent,40 percent,5 percent,and 5 percent,the Herfindahl-Hirschman Index is

Because economic profits are eliminated in the long run in monopolistic competition,to make an economic profit,firms continuously

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

What type of profit can a firm in monopolistic competition make in the long run? Explain your answer.

The firm in the above figure has a markup of ________ per meal.

Product differentiation means

In monopolistic competition,there is inefficiency because price is greater than marginal cost.What brings about this inefficiency?

How would a merger between Coca-Cola and Pepsi Cola affect the four-firm concentration ratio for the soft drink market? How would it affect the Herfindahl-Hirschman Index for the soft drink market?

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry.

If a firm in monopolistic competition is making an economic profit,

When a firm maximizes its profit,which of the following is correct for firms in monopolistic competition and perfect competition?

To maximize its profit,the firm in the figure above will produce ________ jeans and set a price of ________ per pair of jeans.

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

Monopolistic competition is efficient when compared to

In the long run,a firm in monopolistic competition will

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

Advertising is a cost that is incurred by .

To maximize its profit,the firm in the figure above will produce jeans and set a price of per pair of jeans.