Question 1

Choose the correct statement about firms in monopolistic competition.

Accepted Answer

A)  A firm must lower its price to sell a greater quantity.
B)  A firm can never incur an economic loss.
C)  Price is never more than marginal cost.
D)  Firms offer identical products.
E)  The most a firm can make is zero economic profit.

Question 2

Use the figure below to answer the following questions.  Figure 13.2.5
-Refer to Figure 13.2.5.The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.

Accepted Answer

A)  zero
B)  $2
C)  $4
D)  $6
E)  $10

Question 3

The profit-maximizing condition for a firm in monopolistic competition is to produce the quantity at which

Accepted Answer

A)  marginal cost equals price.
B)  price equals marginal revenue.
C)  average total cost equals price.
D)  marginal cost equals marginal revenue.
E)  average variable cost equals price.

Question 4

An industry with a high four-firm concentration ratio may have little monopoly power if

Accepted Answer

A)  its production is geographically concentrated.
B)  its barriers to entry are low.
C)  its barriers to entry are high.
D)  there are no international producers of the product.
E)  there are no close substitutes for its product.

Question 5

Use the figure below to answer the following questions.  Figure 13.2.5
-Refer to Figure 13.2.5 The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?

Accepted Answer

A)  zero
B)  between $1 and $700
C)  between $701 and $900
D)  more than $901
E)  less than zero

Question 6

In monopolistic competition,advertising costs

Accepted Answer

A)  are variable costs.
B)  can result in the firm producing an amount of output such that its average total cost is lower than if it did not advertise.
C)  shift the ATC curve downward.
D)  shift the AVC curve upward.
E)  shift the MC curve upward. B

Question 7

Monopolistic competition might be efficient if

Accepted Answer

A)  firms invested in technology that decreased the marginal cost of production.
B)  more firms entered the industry.
C)  firms left the industry.
D)  the loss that arises because the quantity produced is less than the efficient quantity is offset by the gain that arises from having a greater degree of product variety.
E)  firms made more use of brand names.

Question 8

Advertising costs of a monopolistically competitive firm are

Accepted Answer

A)  greater than a monopoly and the same as a perfectly competitive firm.
B)  greater than a perfectly competitive firm.
C)  less than a perfectly competitive firm.
D)  the same as a monopoly.
E)  less than a monopoly.

Question 9

In the long run,all firms in an industry that is monopolistically competitive

Accepted Answer

A)  produce at their efficient scale.
B)  set price equal to marginal cost.
C)  incur an economic profit.
D)  make an economic profit.
E)  make zero economic profit.

Question 10

Use the figure below to answer the following question.  Figure 13.2.7
-Refer to Figure 13.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of

Accepted Answer

A)  4 units.
B)  8 units.
C)  16 units.
D)  $10.
E)  $5. B

Question 11

Use the information below to answer the following questions.
Fact 13.3.3
Suppose that Roots' marginal cost of a jacket is a constant $125.00 and the total fixed cost at one of its stores is $1,500 a day.This store sells 20 jackets a day,which is its profit-maximizing number of jackets.Then the stores nearby start to advertise their jackets.The Roots store now spends $2,000 a day advertising its jackets,and its profit-maximizing number of jackets sold jumps to 70 a day.
-Refer to Fact 13.3.3.In the long run,Roots' economic profit is

Accepted Answer

A)  positive.
B)  negative.
C)  zero.
D)  greater than the economic profit of its competitors.
E)  less than the economic profit of its competitors.

Question 12

In the long run,a monopolistically competitive firm produces the output at which price equals

Accepted Answer

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

Question 13

The key feature of monopolistic competition that distinguishes it from perfect competition is

Accepted Answer

A)  many sellers.
B)  barriers to entry.
C)  perfectly elastic demand.
D)  product differentiation.
E)  perfectly inelastic demand.

Question 14

Within a monopolistically competitive industry,

Accepted Answer

A)  firms can freely enter and exit,and economic profit is zero in the long run.
B)  firms can freely enter and exit,and economic profit is greater than zero in the long run.
C)  there are some barriers to entry and exit,and economic profit is zero in the long run.
D)  there are some barriers to entry and exit,and economic profit is greater than zero in the long run.
E)  firms can freely enter and exit,and economic profit is zero in the short run.

Question 15

The four-firm concentration ratio tells us the percentage of ________ for the four largest firms in an industry.

Accepted Answer

A)  employment
B)  accounting profit
C)  economic profit
D)  the value of sales
E)  physical output

Question 16

The decision to undertake product development in monopolistic competition is made by comparing the

Accepted Answer

A)  marginal benefit of product development to the marginal cost of product development.
B)  marginal revenue of product development to the average total cost of product development.
C)  total revenue of product development to the total cost of product development.
D)  firm's expenditure on product development to expenditures by competing firms.
E)  total benefit of product development to the total cost of advertising.

Question 17

When the Herfindahl-Hirschman Index (HHI) is greater than 2,500,

Accepted Answer

A)  the market is very competitive.
B)  a monopoly exists.
C)  there are many producers in the market.
D)  the market is moderately competitive.
E)  the market is uncompetitive.

Question 18

Which one of the following characteristics is shared by perfect competition and monopolistic competition?

Accepted Answer

A)  Firms face a downward-sloping demand curve.
B)  Profit-maximizing quantity occurs where MC = MR.
C)  Long-run equilibrium price equals minimum ATC.
D)  Firms make an economic profit in the long run.
E)  Demand is perfectly elastic.

Question 19

Use the figure below to answer the following questions.  Figure 13.2.6
-Refer to Figure 13.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.

Accepted Answer

A)  loss;$8,000
B)  loss;$13,000
C)  profit;$7,200
D)  profit;$13,000
E)  loss;$8,960 A

Question 20

A monopolistically competitive firm is able to influence the price of what it sells because of

Accepted Answer

A)  barriers to entry.
B)  economies of scale.
C)  product differentiation.
D)  the fact there are many buyers.
E)  inelastic demand.

Exam 13: Monopolistic Competition

Choose the correct statement about firms in monopolistic competition.

Correct Answer
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Use the figure below to answer the following questions. Figure 13.2.5 -Refer to Figure 13.2.5.The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.

Correct Answer
verified

The profit-maximizing condition for a firm in monopolistic competition is to produce the quantity at which

Correct Answer
verified

An industry with a high four-firm concentration ratio may have little monopoly power if

Correct Answer
verified

Use the figure below to answer the following questions. Figure 13.2.5 -Refer to Figure 13.2.5 The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?

Correct Answer
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In monopolistic competition,advertising costs

Correct Answer
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B

Monopolistic competition might be efficient if

Correct Answer
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Advertising costs of a monopolistically competitive firm are

Correct Answer
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In the long run,all firms in an industry that is monopolistically competitive

Correct Answer
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Use the figure below to answer the following question. Figure 13.2.7 -Refer to Figure 13.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of

Correct Answer
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B

Correct Answer
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In the long run,a monopolistically competitive firm produces the output at which price equals

Correct Answer
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The key feature of monopolistic competition that distinguishes it from perfect competition is

Correct Answer
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Within a monopolistically competitive industry,

Correct Answer
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The four-firm concentration ratio tells us the percentage of ________ for the four largest firms in an industry.

Correct Answer
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The decision to undertake product development in monopolistic competition is made by comparing the

Correct Answer
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When the Herfindahl-Hirschman Index (HHI) is greater than 2,500,

Correct Answer
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Which one of the following characteristics is shared by perfect competition and monopolistic competition?

Correct Answer
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Use the figure below to answer the following questions. Figure 13.2.6 -Refer to Figure 13.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic is a day.

Correct Answer
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A

A monopolistically competitive firm is able to influence the price of what it sells because of

Correct Answer
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Exam 13: Monopolistic Competition

Choose the correct statement about firms in monopolistic competition.

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 13.2.5 -Refer to Figure 13.2.5.The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.

Correct AnswerverifiedShow Answer

The profit-maximizing condition for a firm in monopolistic competition is to produce the quantity at which

Correct AnswerverifiedShow Answer

An industry with a high four-firm concentration ratio may have little monopoly power if

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 13.2.5 -Refer to Figure 13.2.5 The figure shows the situation facing Smart Digit,Inc. ,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?

Correct AnswerverifiedShow Answer

In monopolistic competition,advertising costs

Correct AnswerverifiedB

Monopolistic competition might be efficient if

Correct AnswerverifiedShow Answer

Advertising costs of a monopolistically competitive firm are

Correct AnswerverifiedShow Answer

In the long run,all firms in an industry that is monopolistically competitive

Correct AnswerverifiedShow Answer

Use the figure below to answer the following question. Figure 13.2.7 -Refer to Figure 13.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

In the long run,a monopolistically competitive firm produces the output at which price equals

Correct AnswerverifiedShow Answer

The key feature of monopolistic competition that distinguishes it from perfect competition is

Correct AnswerverifiedShow Answer

Within a monopolistically competitive industry,

Correct AnswerverifiedShow Answer

The four-firm concentration ratio tells us the percentage of ________ for the four largest firms in an industry.

Correct AnswerverifiedShow Answer

The decision to undertake product development in monopolistic competition is made by comparing the

Correct AnswerverifiedShow Answer

When the Herfindahl-Hirschman Index (HHI) is greater than 2,500,

Correct AnswerverifiedShow Answer

Which one of the following characteristics is shared by perfect competition and monopolistic competition?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 13.2.6 -Refer to Figure 13.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.

Correct AnswerverifiedA

A monopolistically competitive firm is able to influence the price of what it sells because of

Correct AnswerverifiedShow Answer

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B

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B

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Use the figure below to answer the following questions. Figure 13.2.6 -Refer to Figure 13.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic is a day.

Correct Answer
verified
A

Correct Answer
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