Question 1

Figure 16-4
 
-Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel d

Question 2

Which of the following is an example of a monopolistically competitive industry?

Accepted Answer

A)   breakfast cereals
B)   cigarettes
C)   restaurants in New York City
D)   milk

Question 3

In a long-run equilibrium,

Accepted Answer

A)   only a perfectly competitive firm operates at its efficient scale.
B)   only a monopolistically competitive firm operates at its efficient scale.
C)   neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost.
D)   both a perfectly competitive firm and a monopolistically competitive firm operate at their efficient scale of production.

Question 4

Product differentiation in monopolistically competitive markets ensures that,for profit-maximizing firms,

Accepted Answer

A)   marginal revenue will equal average total cost.
B)   price will exceed marginal cost.
C)   marginal cost will exceed average revenue.
D)   average variable cost will be declining.

Question 5

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

Accepted Answer

A)   there are too few firms to reach an efficient level of production.
B)   firms do not operate at the output that minimizes average costs.
C)   more advertising is needed to inform customers about product differences.
D)   consumers do not have enough choice among the product varieties available.

Question 6

When a market is monopolistically competitive,the typical firm in the market can earn

Accepted Answer

A)   losses in the short run and profits in the long run.
B)   profits in the short run and the long run.
C)   losses in the short run and zero profit in the long run.
D)   zero profit in the short run and losses in the long run.

Question 7

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00,while Up and Up (not a brand name) sells for $3.00.Even defenders of brand names would have to admit that

Accepted Answer

A)   no rational consumer would spend twice as much for Olay as she would for Up and Up.
B)   the side-by-side presence of these two body washes conveys no useful information to consumers.
C)   Olay has no incentive to maintain the quality of its product just because of the Olay brand name.
D)   None of the above is correct.

Question 8

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Accepted Answer

A)   The monopolistically competitive firm advertises.
B)   The monopolistically competitive firm produces a quantity of output that falls short of the socially optimal level.
C)   Monopolistic competition features many buyers.
D)   Monopolistic competition features many sellers.

Question 9

Which of the following goods are likely to be sold in a monopolistically competitive market?

Accepted Answer

A)   sweaters
B)   cola
C)   corn
D)   postage stamps

Question 10

Monopolistic competition and monopoly are examples of a market structure called imperfect competition.

Accepted Answer

A) True 
 B)False

Question 11

When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,

Accepted Answer

A)   the firm must be earning a positive economic profit.
B)   the firm may be incurring economic losses
C)   there is a deadweight loss to society, but it is exactly offset by the benefit of excess capacity.
D)   new firms will enter the market in the long run.

Question 12

Monopolistic competition is characterized by many buyers and sellers,product differentiation,and barriers to entry.

Accepted Answer

A) True 
 B)False

Question 13

When quality cannot be easily judged in advance,what provides consumers with information about the quality of a product?

Accepted Answer

A)   a brand name
B)   a tie-in
C)   the quantity available for sale
D)   the amount of deadweight loss

Question 14

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1.Which industry is the most competitive?

Accepted Answer

A)   Industry W
B)   Industry X
C)   Industry Y
D)   Industry Z

Question 15

Roberto consumes Coke exclusively.He claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in his mouth.In a blind taste test,Roberto is found to prefer Coke to store-brand cola eight out of ten times.The results of Roberto's taste test would refute claims by critics of brand names that

Accepted Answer

A)   consumers are always willing to pay more for brand names.
B)   brand names cause consumers to perceive differences that do not really exist.
C)   consumers with the lowest levels of income are the most likely to be influenced by brand name advertising.
D)   brand names are a form of socially efficient advertising.

Question 16

Economists are unanimous in their belief that advertising is socially inefficient.

Accepted Answer

A) True 
 B)False

Question 17

In which of the following market structures can firms earn economic profits in the long run?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   monopoly
D)   Both b and c are correct.

Question 18

A monopolistically competitive market

Accepted Answer

A)   usually has too many firms, reducing the economic profit of each firm to zero.
B)   usually has too few firms, reducing the product variety for consumers.
C)   may have too many or too few firms, and the government can intervene to achieve the optimal number of firms.
D)   may have too many or too few firms, but the government can do little to rectify the situation.

Question 19

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.If the government forces this firm to produce at its efficient output level,how much profit will this firm earn?

Accepted Answer

A)   a $4 loss
B)   a $6 loss
C)   a $6 profit
D)   a $12 profit

Question 20

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?

Accepted Answer

A)   a $4 loss
B)   a $2 loss
C)   a $6 profit
D)   a $16 profit

Exam 16: Monopolistic Competition.

Economists are unanimous in their belief that advertising is socially inefficient.

Correct Answer
verified

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00,while Up and Up (not a brand name) sells for $3.00.Even defenders of brand names would have to admit that

Correct Answer
verified

When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,

Correct Answer
verified

In a long-run equilibrium,

Correct Answer
verified

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Correct Answer
verified

Monopolistic competition and monopoly are examples of a market structure called imperfect competition.

Correct Answer
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Which of the following is an example of a monopolistically competitive industry?

Correct Answer
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Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1.Which industry is the most competitive?

Correct Answer
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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.If the government forces this firm to produce at its efficient output level,how much profit will this firm earn?

Correct Answer
verified

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

Correct Answer
verified

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Correct Answer
verified

Monopolistic competition is characterized by many buyers and sellers,product differentiation,and barriers to entry.

Correct Answer
verified

When a market is monopolistically competitive,the typical firm in the market can earn

Correct Answer
verified

When quality cannot be easily judged in advance,what provides consumers with information about the quality of a product?

Correct Answer
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A monopolistically competitive market

Correct Answer
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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?

Correct Answer
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Which of the following goods are likely to be sold in a monopolistically competitive market?

Correct Answer
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Correct Answer
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In which of the following market structures can firms earn economic profits in the long run?

Correct Answer
verified

Product differentiation in monopolistically competitive markets ensures that,for profit-maximizing firms,

Correct Answer
verified

Exam 16: Monopolistic Competition.

Economists are unanimous in their belief that advertising is socially inefficient.

Correct AnswerverifiedShow Answer

Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00,while Up and Up (not a brand name) sells for $3.00.Even defenders of brand names would have to admit that

Correct AnswerverifiedShow Answer

When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,

Correct AnswerverifiedShow Answer

In a long-run equilibrium,

Correct AnswerverifiedShow Answer

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Correct AnswerverifiedShow Answer

Monopolistic competition and monopoly are examples of a market structure called imperfect competition.

Correct AnswerverifiedShow Answer

Which of the following is an example of a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1.Which industry is the most competitive?

Correct AnswerverifiedShow Answer

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.If the government forces this firm to produce at its efficient output level,how much profit will this firm earn?

Correct AnswerverifiedShow Answer

The traditional view of monopolistic competition holds that this type of industrial structure is inefficient because

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to Figure 16-4.Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by many buyers and sellers,product differentiation,and barriers to entry.

Correct AnswerverifiedShow Answer

When a market is monopolistically competitive,the typical firm in the market can earn

Correct AnswerverifiedShow Answer

When quality cannot be easily judged in advance,what provides consumers with information about the quality of a product?

Correct AnswerverifiedShow Answer

A monopolistically competitive market

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following goods are likely to be sold in a monopolistically competitive market?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In which of the following market structures can firms earn economic profits in the long run?

Correct AnswerverifiedShow Answer

Product differentiation in monopolistically competitive markets ensures that,for profit-maximizing firms,

Correct AnswerverifiedShow Answer

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