Question 1

Why are demand and marginal revenue represented by the same curve for a firm in a perfectly competitive market,but by separate curves for a firm in a monopolistically competitive market?

Accepted Answer

The answer of Why are demand and marginal revenue represented...

Question 2

Monopolistic competition is a market structure in which

Accepted Answer

A)  firms produce and sell products for which there are no close substitutes. 
B)  the demand curve for a typical firm is horizontal. 
C)  firms cannot influence the market price. 
D)  barriers to entry are low.

Question 3

Figure 13-8  Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 13-8.What is the firm's profit-maximizing price?

Accepted Answer

A)  $12 
B)  $13 
C)  $14 
D)  $16

Question 4

If a firm can produce a product at a lower average cost than its competitors,it stands a better chance of earning economic profit.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true about monopolistically competitive firms?

Accepted Answer

A)  Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers. 
B)  Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products. 
C)  Like perfectly competitive firms, monopolistically competitive firms maximize their profits by settling price equal to marginal cost. 
D)  Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.

Question 6

If the demand curve for a firm is downward-sloping,its marginal revenue curve

Accepted Answer

A)  will lie above the demand curve. 
B)  will lie below the demand curve. 
C)  is the same as the demand curve. 
D)  is horizontal.

Question 7

For a monopolistically competitive firm,price equals average revenue.

Accepted Answer

A) True 
 B)False

Question 8

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximize profits the firm should increase its output.

Accepted Answer

A) True 
 B)False

Question 9

Arturo runs a Taco Bell franchise.He is selling 250 Gordita Supremes per week at a price of $2.75.If he lowers the price to $2.70,he will sell 251 Gordita Supremes.What is the marginal revenue of the 251st Gordita Supreme? If selling the extra Gordita Supreme adds $0.20 to Arturo's costs,what will be the effect on his profit from selling 251 Gordita Supremes instead of 250?

Accepted Answer

The answer of Arturo runs a Taco Bell franchise.He is...

Question 10

Compared to a perfectly competitive firm,the demand curve facing a monopolistically competitive firm is

Accepted Answer

A)  more elastic because there are many close substitutes for the product of a monopolistically competitive firm. 
B)  less elastic because monopolistically competitive firms produce similar, but not identical, products. 
C)  just as elastic because there are many sellers in both markets. 
D)  more elastic because in the long run, the demand curve is tangent to the firm's average total cost curve.

Question 11

Which of the following characterizes the market that Starbucks competes in?

Accepted Answer

A)  All coffeehouses face horizontal demand curves. 
B)  Coffeehouses sell identical products. 
C)  Barriers to entry are low. 
D)  There are a small number of firms.

Question 12

Figure 13-6 
-Refer to Figure 13-6.Suppose the above graph represents the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced by Dell.On a graph,illustrate the demand,MR,MC,and ATC curves which would represent Dell maximizing profits at a quantity of 100,000 per month and identify the area on the graph which represents the profit.

Accepted Answer

The answer of Figure 13-6 
-Refer to Figure 13-6.Suppose the...

Question 13

For a monopolistically competitive firm,marginal revenue

Accepted Answer

A)  equals the price. 
B)  is greater than the price. 
C)  is less than the price. 
D)  and price are unrelated.

Question 14

Figure 13-10  Figure 13-10 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 13-10.to answer the following questions.
a.What is the profit-maximizing output level?
b.What is the profit-maximizing price?
c.At the profit-maximizing output level,how much profit will be realized?
d.Does this graph most likely represent the long run or the short run? Why?

Accepted Answer

The answer of Figure 13-10  Figure 13-10 shows cost...

Question 15

In contrast with perfect competition,excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

Accepted Answer

A)  Monopolistically competitive firms produce at the minimum point on their average total cost curves. 
B)  Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves. 
C)  Monopolistically competitive firms produce where marginal revenue is equal to marginal cost. 
D)  Monopolistically competitive markets have low barriers to entry.

Question 16

Table 13-2
  Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules.
-Refer to Table 13-2.What is Eco Energy's profit?

Accepted Answer

A)  $125 
B)  $140 
C)  $145 
D)  $150

Question 17

Table 13-1
 
-Refer to Table 13-1.What is the marginal revenue of the 3rd unit?

Accepted Answer

A)  $6.50 
B)  $5.50 
C)  $1.83 
D)  $0.50

Question 18

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Accepted Answer

A)  Price, average revenue, and marginal revenue are all equal. 
B)  Price, average revenue, and marginal revenue are all different. 
C)  Price equals average revenue but is greater than marginal revenue. 
D)  Price equals average revenue but is less than marginal revenue.

Question 19

The key characteristics of a monopolistically competitive market structure include

Accepted Answer

A)  few sellers. 
B)  sellers selling similar but differentiated products. 
C)  high barriers to entry. 
D)  sellers acting to maximize revenue.

Question 20

A major difference between monopolistic competition and perfect competition is

Accepted Answer

A)  the number of sellers in the markets. 
B)  the degree by which the market demand curves slope downwards. 
C)  that products are not standardized in monopolistic competition unlike in perfect competition. 
D)  the barriers to entry in the two markets.

Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

Why are demand and marginal revenue represented by the same curve for a firm in a perfectly competitive market,but by separate curves for a firm in a monopolistically competitive market?

Monopolistic competition is a market structure in which

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 13-8.What is the firm's profit-maximizing price?

If a firm can produce a product at a lower average cost than its competitors,it stands a better chance of earning economic profit.

Which of the following statements is true about monopolistically competitive firms?

If the demand curve for a firm is downward-sloping,its marginal revenue curve

For a monopolistically competitive firm,price equals average revenue.

Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximize profits the firm should increase its output.

Compared to a perfectly competitive firm,the demand curve facing a monopolistically competitive firm is

Which of the following characterizes the market that Starbucks competes in?

For a monopolistically competitive firm,marginal revenue

In contrast with perfect competition,excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

Table 13-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules. -Refer to Table 13-2.What is Eco Energy's profit?

Table 13-1 -Refer to Table 13-1.What is the marginal revenue of the 3rd unit?

Which of the following is true for a firm with a downward-sloping demand curve for its product?

The key characteristics of a monopolistically competitive market structure include

A major difference between monopolistic competition and perfect competition is