Question 1

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Accepted Answer

A)  100 percent 
B)  75 percent 
C)  25 percent 
D)  0 percent 
E)  91 percent 
A)  100 percent 
B)  75 percent 
C)  25 percent 
D)  0 percent 
E)  91 percent

Question 2

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

Accepted Answer

In monopolistic competition,the product

Question 3

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,then this industry is best characterized as

Accepted Answer

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

Question 4

What is the Herfindahl-Hirschman Index and what does it measure?

Accepted Answer

The Herfindahl-Hirschman Index,or HHI,is

Question 5

A firm's efficient scale of production is the output at which its

Accepted Answer

A)  marginal cost is at a minimum. 
B)  average total cost is at a minimum. 
C)  profit is maximized. 
D)  marginal revenue is at a maximum. 
E)  marginal revenue equals marginal cost. 
A)  marginal cost is at a minimum. 
B)  average total cost is at a minimum. 
C)  profit is maximized. 
D)  marginal revenue is at a maximum. 
E)  marginal revenue equals marginal cost.

Question 6

-The figure above shows Firm X.The firm is a monopolistically competitive market.The firm makes an ________ in the short run but will ________ in the long run.

Accepted Answer

A)  economic loss of $10 per unit; go out of business or make a zero economic profit 
B)  economic loss of $2 per unit; make an economic profit 
C)  economic profit $10 per unit; make zero economic profit 
D)  economic profit of $1000; definitely go out of business 
E)  economic loss of $10 per unit; definitely face more competition 
A)  economic loss of $10 per unit; go out of business or make a zero economic profit 
B)  economic loss of $2 per unit; make an economic profit 
C)  economic profit $10 per unit; make zero economic profit 
D)  economic profit of $1000; definitely go out of business 
E)  economic loss of $10 per unit; definitely face more competition

Question 7

A firm in monopolistic competition maximizes profit by equating

Accepted Answer

A)  price and marginal revenue. 
B)  price and marginal cost. 
C)  demand and marginal cost. 
D)  marginal revenue and marginal cost. 
E)  price and average total cost. 
A)  price and marginal revenue. 
B)  price and marginal cost. 
C)  demand and marginal cost. 
D)  marginal revenue and marginal cost. 
E)  price and average total cost.

Question 8

A firm in monopolistic competition makes its decisions on quantity and price by

Accepted Answer

A)  taking price as given from the market and producing where MR = MC. 
B)  taking both price and quantity as given from the market. 
C)  producing where MR = MC and setting the price for this quantity from the demand curve. 
D)  taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E)  producing where MR = MC and setting the price so that P = MR = MC. 
A)  taking price as given from the market and producing where MR = MC. 
B)  taking both price and quantity as given from the market. 
C)  producing where MR = MC and setting the price for this quantity from the demand curve. 
D)  taking quantity as given from the market and setting the price for this quantity from the demand curve. 
E)  producing where MR = MC and setting the price so that P = MR = MC.

Question 9

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.A firm in mon

Question 10

For a firm in monopolistic competition,selling costs

Accepted Answer

A)  increase costs and reduce profits. 
B)  always increase demand. 
C)  can change the quantity produced and lower the average total cost. 
D)  can lower total cost. 
E)  have no effect on the quantity sold. 
A)  increase costs and reduce profits. 
B)  always increase demand. 
C)  can change the quantity produced and lower the average total cost. 
D)  can lower total cost. 
E)  have no effect on the quantity sold.

Question 11

How do the characteristics of perfect competition and monopolistic competition differ?

Accepted Answer

In monopolistic competition,the products

Question 12

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Accepted Answer

A)  Nothing, the marginal revenue curve is unchanged. 
B)  It disappears. 
C)  It shifts rightward. 
D)  It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic. 
A)  Nothing, the marginal revenue curve is unchanged. 
B)  It disappears. 
C)  It shifts rightward. 
D)  It shifts leftward. 
E)  None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic.

Question 13

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 14

Why would a firm in a monopolistically competitive industry advertise?

Accepted Answer

Similar to virtually every other busines

Question 15

-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.What price will Kevin charge per session?

Accepted Answer

A)  $100 
B)  $60 
C)  $40 
D)  $20 
E)  $80 
A)  $100 
B)  $60 
C)  $40 
D)  $20 
E)  $80

Question 16

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

Accepted Answer

The efficient scale is the quantity prod

Question 17

Product differentiation means

Accepted Answer

A)  making a product that has perfect substitutes. 
B)  making a product that is entirely unique. 
C)  the inability to set your own price. 
D)  making a product that is slightly different from products of competing firms. 
E)  making your demand curve horizontal. 
A)  making a product that has perfect substitutes. 
B)  making a product that is entirely unique. 
C)  the inability to set your own price. 
D)  making a product that is slightly different from products of competing firms. 
E)  making your demand curve horizontal.

Question 18

To maintain their economic profits,firms in monopolistic competition must continually engage in

Accepted Answer

A)  product development and marketing. 
B)  lowering their product's price. 
C)  raising their product's price. 
D)  realizing short-run losses. 
E)  making the demand for their product more elastic. 
A)  product development and marketing. 
B)  lowering their product's price. 
C)  raising their product's price. 
D)  realizing short-run losses. 
E)  making the demand for their product more elastic.

Question 19

In the long run,a firm in monopolistic competition ________ a markup of price over marginal cost,and a firm in perfect competition ________ a markup of price over marginal cost.

Accepted Answer

A)  has; has 
B)  has; does not have 
C)  does not have; has 
D)  does not have; does not have 
E)  might have; might have 
A)  has; has 
B)  has; does not have 
C)  does not have; has 
D)  does not have; does not have 
E)  might have; might have

Question 20

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

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,then this industry is best characterized as

What is the Herfindahl-Hirschman Index and what does it measure?

A firm's efficient scale of production is the output at which its

-The figure above shows Firm X.The firm is a monopolistically competitive market.The firm makes an in the short run but will in the long run.

A firm in monopolistic competition maximizes profit by equating

A firm in monopolistic competition makes its decisions on quantity and price by

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

For a firm in monopolistic competition,selling costs

How do the characteristics of perfect competition and monopolistic competition differ?

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Advertising costs

Why would a firm in a monopolistically competitive industry advertise?

-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.What price will Kevin charge per session?

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

Product differentiation means

To maintain their economic profits,firms in monopolistic competition must continually engage in

In the long run,a firm in monopolistic competition a markup of price over marginal cost,and a firm in perfect competition a markup of price over marginal cost.

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 .

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

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

What do demand and marginal revenue curves look like in monopolistic competition? How do they compare to the demand and marginal revenue curves in perfect competition and monopoly?

If the four-firm concentration ratio equals 0.1 percent for the Mexican tomato industry,then this industry is best characterized as

What is the Herfindahl-Hirschman Index and what does it measure?

A firm's efficient scale of production is the output at which its

-The figure above shows Firm X.The firm is a monopolistically competitive market.The firm makes an ________ in the short run but will ________ in the long run.

A firm in monopolistic competition maximizes profit by equating

A firm in monopolistic competition makes its decisions on quantity and price by

"A firm in monopolistic competition maximizes its profit by producing where its price is equal to its marginal cost." Is the previous statement correct or incorrect?

For a firm in monopolistic competition,selling costs

How do the characteristics of perfect competition and monopolistic competition differ?

When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?

Advertising costs

Why would a firm in a monopolistically competitive industry advertise?

-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.What price will Kevin charge per session?

For a firm in monopolistic competition,define efficient scale and excess capacity.Briefly explain each.

Product differentiation means

To maintain their economic profits,firms in monopolistic competition must continually engage in

In the long run,a firm in monopolistic competition ________ a markup of price over marginal cost,and a firm in perfect competition ________ a markup of price over marginal cost.

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 ________.

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 is a monopolistically competitive market.The firm makes an in the short run but will in the long run.

In the long run,a firm in monopolistic competition a markup of price over marginal cost,and a firm in perfect competition a markup of price over marginal cost.

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 .