Question 1

If a monopolistically competitive seller's marginal cost is $3.56,the firm will decrease 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)  its average total cost is equal to $4.00. 
E)  Both answers B 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)  its average total cost is equal to $4.00. 
E)  Both answers B and D are correct.

Question 2

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

Accepted Answer

A)  competitive. 
B)  not competitive. 
C)  moderately competitive. 
D)  purely competitive. 
E)  either a monopoly or monopolistic competition. 
A)  competitive. 
B)  not competitive. 
C)  moderately competitive. 
D)  purely competitive. 
E)  either a monopoly or monopolistic competition.

Question 3

-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 4

A firm in monopolistic competition has a ________ market share and ________ influence the price of its good or service.

Accepted Answer

A)  large; can 
B)  large; cannot 
C)  small; can 
D)  small; cannot 
E)  large; might be able to 
A)  large; can 
B)  large; cannot 
C)  small; can 
D)  small; cannot 
E)  large; might be able to

Question 5

One of the major benefits to society of monopolistic competition is

Accepted Answer

A)  high prices. 
B)  restricted output. 
C)  product differentiation. 
D)  the excess capacity. 
E)  the markup. 
A)  high prices. 
B)  restricted output. 
C)  product differentiation. 
D)  the excess capacity. 
E)  the markup.

Question 6

Each of the ten firms in an industry has 10 percent of the industry's total revenue.The four-firm concentration ratio is

Accepted Answer

A)  80. 
B)  100. 
C)  1,000. 
D)  40. 
E)  10. 
A)  80. 
B)  100. 
C)  1,000. 
D)  40. 
E)  10.

Question 7

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a ________ demand for its product and is able to charge ________.

Accepted Answer

A)  less elastic; a lower price than before 
B)  less elastic; a higher price than before 
C)  more elastic; a lower price than before 
D)  more elastic; a higher price than before 
E)  less elastic; the same price as before 
A)  less elastic; a lower price than before 
B)  less elastic; a higher price than before 
C)  more elastic; a lower price than before 
D)  more elastic; a higher price than before 
E)  less elastic; the same price as before

Question 8

Why is collusion about the price and amount of output impossible in monopolistic competition?

Accepted Answer

The smaller the number of firm

Question 9

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 10

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Accepted Answer

A)  demand curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  average total cost curve. 
E)  average variable cost curve. 
A)  demand curve. 
B)  marginal cost curve. 
C)  marginal revenue curve. 
D)  average total cost curve. 
E)  average variable cost curve.

Question 11

Monopolistic competition is judged to be economically inefficient because

Accepted Answer

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

Question 12

In a market in which firms operate in monopolistic competition,

Accepted Answer

A)  the HHI for a single firm exceeds 2500. 
B)  firms compete on price, quality and marketing. 
C)  in the long run, firms produce at their efficient scale. 
D)  in the long run, firms are not able to charge a markup. 
E)  advertising is nonexistent. 
A)  the HHI for a single firm exceeds 2500. 
B)  firms compete on price, quality and marketing. 
C)  in the long run, firms produce at their efficient scale. 
D)  in the long run, firms are not able to charge a markup. 
E)  advertising is nonexistent.

Question 13

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

Accepted Answer

A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  can; only in the short run can 
A)  can; can 
B)  can; cannot 
C)  cannot; can 
D)  cannot; cannot 
E)  can; only in the short run can

Question 14

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion ________ consumers because it ________.

Accepted Answer

A)  helps; lowers marginal cost 
B)  harms; definitely increases average total cost 
C)  helps; provides a signal and information about the sunglasses 
D)  harms; increases the elasticity of demand 
E)  helps; is a fixed cost and not a variable cost 
A)  helps; lowers marginal cost 
B)  harms; definitely increases average total cost 
C)  helps; provides a signal and information about the sunglasses 
D)  harms; increases the elasticity of demand 
E)  helps; is a fixed cost and not a variable cost

Question 15

One problem with measures of market concentrations is that they do not

Accepted Answer

A)  account for barriers to entry. 
B)  allow for all market types. 
C)  account for the difficulty in collecting total revenue data. 
D)  create meaningful comparisons across industries. 
E)  accurately measure concentration in markets with fewer than 4 firms. 
A)  account for barriers to entry. 
B)  allow for all market types. 
C)  account for the difficulty in collecting total revenue data. 
D)  create meaningful comparisons across industries. 
E)  accurately measure concentration in markets with fewer than 4 firms.

Question 16

A monopolistically competitive firm ________ have excess capacity because its ________.

Accepted Answer

A)  does; demand curve is downward sloping 
B)  does not; demand curve is downward sloping 
C)  does; average total cost curve is U-shaped 
D)  does not; average total cost curve is U-shaped 
E)  does; marginal revenue curve lies below its demand curve 
A)  does; demand curve is downward sloping 
B)  does not; demand curve is downward sloping 
C)  does; average total cost curve is U-shaped 
D)  does not; average total cost curve is U-shaped 
E)  does; marginal revenue curve lies below its demand curve

Question 17

The women's dress industry is monopolistically competitive because each firm has

Accepted Answer

A)  a large market share. 
B)  a very small market share. 
C)  no market share. 
D)  no competition for their market share. 
E)  struck a deal with the many other firms about what price will be charged. 
A)  a large market share. 
B)  a very small market share. 
C)  no market share. 
D)  no competition for their market share. 
E)  struck a deal with the many other firms about what price will be charged.

Question 18

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

Accepted Answer

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

Question 19

In the long run,firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Accepted Answer

A)  less than 
B)  equal to 
C)  more than 
D)  not comparable to 
E)  All of the above are possible depending on market conditions. 
A)  less than 
B)  equal to 
C)  more than 
D)  not comparable to 
E)  All of the above are possible depending on market conditions.

Question 20

Nike is a firm in monopolistic competition.If Nike is making an economic profit from new cross-training shoe,over time the demand for these shoes

Accepted Answer

A)  increases as new firms enter the market. 
B)  decreases as new firms enter the market. 
C)  does not change as new firms enter the market. 
D)  decreases as firms exit the market. 
E)  increases as firms exit the market. 
A)  increases as new firms enter the market. 
B)  decreases as new firms enter the market. 
C)  does not change as new firms enter the market. 
D)  decreases as firms exit the market. 
E)  increases as firms exit the market.

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

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

-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.

A firm in monopolistic competition has a market share and influence the price of its good or service.

One of the major benefits to society of monopolistic competition is

Each of the ten firms in an industry has 10 percent of the industry's total revenue.The four-firm concentration ratio is

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a demand for its product and is able to charge .

Why is collusion about the price and amount of output impossible in monopolistic competition?

Because of the number of firms in monopolistic competition,

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Monopolistic competition is judged to be economically inefficient because

In a market in which firms operate in monopolistic competition,

A firm in monopolistic competition influence its price and influence the market average price.

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion consumers because it .

One problem with measures of market concentrations is that they do not

A monopolistically competitive firm have excess capacity because its .

The women's dress industry is monopolistically competitive because each firm has

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

In the long run,firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Nike is a firm in monopolistic competition.If Nike is making an economic profit from new cross-training shoe,over time the demand for these shoes

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

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

A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be

-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.

A firm in monopolistic competition has a ________ market share and ________ influence the price of its good or service.

One of the major benefits to society of monopolistic competition is

Each of the ten firms in an industry has 10 percent of the industry's total revenue.The four-firm concentration ratio is

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a ________ demand for its product and is able to charge ________.

Why is collusion about the price and amount of output impossible in monopolistic competition?

Because of the number of firms in monopolistic competition,

Once a firm in monopolistic competition has determined how much to produce,the firm determines its price by referring to its

Monopolistic competition is judged to be economically inefficient because

In a market in which firms operate in monopolistic competition,

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion ________ consumers because it ________.

One problem with measures of market concentrations is that they do not

A monopolistically competitive firm ________ have excess capacity because its ________.

The women's dress industry is monopolistically competitive because each firm has

To maximize profit,a firm in monopolistic competition will produce the quantity where marginal revenue

In the long run,firms in monopolistic competition produce at a level that is ________ the efficient scale of output.

Nike is a firm in monopolistic competition.If Nike is making an economic profit from new cross-training shoe,over time the demand for these shoes

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

A firm in monopolistic competition has a market share and influence the price of its good or service.

A firm in monopolistic competition that introduces a new and differentiated product will temporarily have a demand for its product and is able to charge .

A firm in monopolistic competition influence its price and influence the market average price.

A sunglass manufacturer spends a lot of money to promote its brand name.This promotion consumers because it .

A monopolistically competitive firm have excess capacity because its .