Question 1

Which of the following market structures will have lower prices in the long run than monopoly,ceteris paribus?

Accepted Answer

A)  Perfect competition,oligopoly,and monopolistic competition.
B)  Perfect competition,but not oligopoly or monopolistic competition.
C)  Perfect competition and oligopoly,but not monopolistic competition.
D)  Oligopoly and monopolistic competition,but not perfect competition.

Question 2

Entry into a market characterized by monopolistic competition is generally

Accepted Answer

A)  Entirely blocked by existing firms.
B)  Very easy because few barriers exist.
C)  As difficult as in oligopoly.
D)  More difficult than entry into monopolized markets.

Question 3

Which of the following characterizes monopolistic competition?

Accepted Answer

A)  Price leadership.
B)  Zero long-run profit.
C)  Retaliation.
D)  Marginal cost pricing.

Question 4

Refer to Figure 26.5.Which firm is least likely to engage in advertising?

Accepted Answer

A)  Firm A only.
B)  Firm B only.
C)  Firm C only.
D)  Firms A,C,and D.

Question 5

The monopoly aspect of monopolistic competition is that there is only one seller.

Accepted Answer

A) True 
 B)False

Question 6

When new firms enter a monopolistically competitive industry,the market

Accepted Answer

A)  Supply curve shifts to the left.
B)  Supply curve shifts to the right.
C)  Demand curve shifts to the left.
D)  Demand curve shifts to the right.

Question 7

The demand curve faced by a monopolistically competitive firm is

Accepted Answer

A)  Downward-sloping.
B)  Flat.
C)  Kinked.
D)  Upward-sloping.

Question 8

Which of the following is not true about a monopolistic competitor?

Accepted Answer

A)  It maximizes profit at the point where MC = MR.
B)  It produces less output than a perfectly competitive firm,ceteris paribus.
C)  It charges a higher price than a perfectly competitive firm,ceteris paribus.
D)  It can earn economic profits in the long run. D

Question 9

If monopolistically competitive firms have some control over the prices they charge,why do they experience zero economic profits in the long run?

Accepted Answer

The key is the relatively easy entry into monopolistically competitive markets.If a typical firm is experiencing economic profits in the short run,new firms will enter the market,reducing the demand and increasing the price elasticity for the typical firm's product.This process will continue as long as there are economic profits-that is,competition will force economic profits to zero in the long run.

Question 10

Monopolistically competitive firms use marginal cost pricing.

Accepted Answer

A) True 
 B)False

Question 11

If economic profits are earned in a monopolistically competitive market,

Accepted Answer

A)  More firms will enter the market.
B)  The market supply curve will shift to the left.
C)  Price will rise.
D)  The market demand curve will shift to the right.

Question 12

A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because

Accepted Answer

A)  The demand for its product is typically very price-elastic.
B)  Its demand curve is horizontal.
C)  Of product differentiation and brand loyalty.
D)  Of the gap in its marginal revenue curve.

Question 13

Which of the firms in Figure 26.5 is most likely a monopoly in the long run?

Accepted Answer

A)  Firm A.
B)  Firm B.
C)  Firm C.
D)  Firm D.

Question 14

Advertising plays a role in reducing the cross-price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 15

In monopolistic competition,each firm competes with other firms offering identical substitutes.

Accepted Answer

A) True 
 B)False

Question 16

For a monopolistically competitive firm,barriers to entry are high,which allows the firm to earn positive economic profits in the long run.

Accepted Answer

A) True 
 B)False

Question 17

Monopolistic competition results in allocative efficiency.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is similar for oligopoly and monopolistic competition?

Accepted Answer

A)  Both have many firms.
B)  Both have low concentration ratios.
C)  Both have market power.
D)  Both make independent production decisions.

Question 19

A monopolistically competitive firm that runs a successful advertising campaign creates enormous goodwill,but this goodwill does little to increase the value of the company.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not an example of nonprice competition in the airline market?

Accepted Answer

A)  A low concentration ratio.
B)  Advertising on the radio.
C)  More on-time flights.
D)  Increased frequency of flights. A

Exam 26: Monopolistic Competition

Which of the following market structures will have lower prices in the long run than monopoly,ceteris paribus?

Correct Answer
verified

Entry into a market characterized by monopolistic competition is generally

Correct Answer
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Which of the following characterizes monopolistic competition?

Correct Answer
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Refer to Figure 26.5.Which firm is least likely to engage in advertising?

Correct Answer
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The monopoly aspect of monopolistic competition is that there is only one seller.

Correct Answer
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When new firms enter a monopolistically competitive industry,the market

Correct Answer
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The demand curve faced by a monopolistically competitive firm is

Correct Answer
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Which of the following is not true about a monopolistic competitor?

Correct Answer
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D

If monopolistically competitive firms have some control over the prices they charge,why do they experience zero economic profits in the long run?

Monopolistically competitive firms use marginal cost pricing.

Correct Answer
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If economic profits are earned in a monopolistically competitive market,

Correct Answer
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A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because

Correct Answer
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Which of the firms in Figure 26.5 is most likely a monopoly in the long run?

Correct Answer
verified

Advertising plays a role in reducing the cross-price elasticity of demand.

Correct Answer
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In monopolistic competition,each firm competes with other firms offering identical substitutes.

Correct Answer
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For a monopolistically competitive firm,barriers to entry are high,which allows the firm to earn positive economic profits in the long run.

Correct Answer
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Monopolistic competition results in allocative efficiency.

Correct Answer
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Which of the following is similar for oligopoly and monopolistic competition?

Correct Answer
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A monopolistically competitive firm that runs a successful advertising campaign creates enormous goodwill,but this goodwill does little to increase the value of the company.

Correct Answer
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Which of the following is not an example of nonprice competition in the airline market?

Correct Answer
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A

Exam 26: Monopolistic Competition

Which of the following market structures will have lower prices in the long run than monopoly,ceteris paribus?

Correct AnswerverifiedShow Answer

Entry into a market characterized by monopolistic competition is generally

Correct AnswerverifiedShow Answer

Which of the following characterizes monopolistic competition?

Correct AnswerverifiedShow Answer

Refer to Figure 26.5.Which firm is least likely to engage in advertising?

Correct AnswerverifiedShow Answer

The monopoly aspect of monopolistic competition is that there is only one seller.

Correct AnswerverifiedShow Answer

When new firms enter a monopolistically competitive industry,the market

Correct AnswerverifiedShow Answer

The demand curve faced by a monopolistically competitive firm is

Correct AnswerverifiedShow Answer

Which of the following is not true about a monopolistic competitor?

Correct AnswerverifiedD

If monopolistically competitive firms have some control over the prices they charge,why do they experience zero economic profits in the long run?

Monopolistically competitive firms use marginal cost pricing.

Correct AnswerverifiedShow Answer

If economic profits are earned in a monopolistically competitive market,

Correct AnswerverifiedShow Answer

A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because

Correct AnswerverifiedShow Answer

Which of the firms in Figure 26.5 is most likely a monopoly in the long run?

Correct AnswerverifiedShow Answer

Advertising plays a role in reducing the cross-price elasticity of demand.

Correct AnswerverifiedShow Answer

In monopolistic competition,each firm competes with other firms offering identical substitutes.

Correct AnswerverifiedShow Answer

For a monopolistically competitive firm,barriers to entry are high,which allows the firm to earn positive economic profits in the long run.

Correct AnswerverifiedShow Answer

Monopolistic competition results in allocative efficiency.

Correct AnswerverifiedShow Answer

Which of the following is similar for oligopoly and monopolistic competition?

Correct AnswerverifiedShow Answer

A monopolistically competitive firm that runs a successful advertising campaign creates enormous goodwill,but this goodwill does little to increase the value of the company.

Correct AnswerverifiedShow Answer

Which of the following is not an example of nonprice competition in the airline market?

Correct AnswerverifiedA

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D

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A