FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Monopolistic Competition

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 141

Multiple Choice

Review LaterAdd Note

Review Later

Scenario 16-7 Consider the problem facing two firms, YumYum and Bertollini, in the frozen food market. Each firm has just come up with an idea for a new "frozen meal for two" which it would sell for $9. Assume that the marginal cost for each new product is a constant $2, and the only fixed cost is for advertising. Each company knows that if it spends $12 million on advertising it will get 1.5 million consumers to try its new product. YumYum has done market research which suggests that its product does not have any "staying" power in the market. Even though it could get 1.5 million consumers to buy the product once, it is unlikely that they will continue to buy the product in the future. Bertollini's market research suggests that its product is very good, and consumers who try the product will continue to be consumers over the ensuing year. On the basis of its market research, Bertollini estimates that its initial 1.5 million customers will buy one unit of the product each month in the coming year, for a total of 18 million units. -Refer to Scenario 16-7. On the basis of a theory that people buy a product because it is advertised, the content of advertisements for Bertollini's product

A) must show a consumer taste-test to be successful.
B) must include celebrity endorsements to be successful.
C) is irrelevant to the success of the advertisement.
D) Both a and b would be equally successful.

Correct Answer

verified

Show Answer

Question 142

Short Answer

Review LaterAdd Note

Review Later

Which market structure(s) is(are) imperfectly competitive?

Correct Answer

verified

oligopoly
...

View Answer

Show Answer

Question 143

Short Answer

Review LaterAdd Note

Figure 16-14 -Refer to Figure 16-14. Which letter identifies the efficient level of output for this firm?

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 0, what price would a profit-maximizing monopolist charge for the product?

Which of the following best describes the idea of excess capacity in monopolistic competition?

Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. -Refer to Table 16-7. If the firm has a constant marginal cost of $7 per unit, how much profit will the firm earn at the profit-maximizing level of output?

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4. How much profit will this firm earn when it chooses its output to maximize profit?

Oligopoly is characterized by a few sellers offering similar products, whereas monopolistic competition is characterized by many sellers offering differentiated products.

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, what price will it charge?

A new Mexican restaurant opens in the city of Manchester. The residents are happy about this new restaurant because they are experiencing what externality?

In monopolistically competitive markets, free entry and exit suggests that

Figure 16-7 -Refer to Figure 16-7. The firm depicted in panel b faces a horizontal demand curve. If panel b depicts a profit-maximizing firm,

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures results in production of the welfare-maximizing level of output?

Critics of markets that are characterized by firms that sell brand name products argue that brand names encourage consumers to pay more for branded products that

Figure 16-5 -Refer to Figure 16-5. Panel b is consistent with a firm in a monopolistically competitive market that is

Assume the role of a critic of advertising. Describe the characteristics of advertising that reduce the effectiveness of markets and decrease the social welfare of society.

Which two curves are tangent to each other in a monopolistically competitive market with zero economic profit?

In which of the following market structures does free entry and exit play an important role in the long-run equilibrium outcome? (i) Perfect competition (ii) Monopolistic competition (iii) Monopoly

Figure 16-5 -Refer to Figure 16-5. Panel a shows a profit-maximizing monopolistically competitive firm that is