Question 1

Imagine opening a known brand-name company location in a lesser-developed country.Describe the effects on that market.

Accepted Answer

Known brand names signal a certain quali...

Question 2

A monopolistically competitive firm usually charges less than a monopoly firm because

Accepted Answer

A)   it is part of a group of firms that has formally agreed to control the price and the output of a product.
B)   its primary goal is to reap monopoly profits by replacing competition with cooperation.
C)   producing homogenous output is more expensive than producing differentiated output.
D)   it faces some degree of competition due to low barriers to entry.
E)   it has a monopoly,but potential entrants exist in the form of contestable markets.

Question 3

Which of the following is the best example of a monopolistic competitor?

Accepted Answer

A)   a corn farmer
B)   a weight-loss program
C)   the U.S.Postal Service
D)   a gas station
E)   a localized cement company

Question 4

Why would perfectly competitive industries advertise even though individual firms do not?

Accepted Answer

A)   Even though the output of an individual firm would be considered homogeneous to other firms,the industry output would be differentiated (for example,Florida orange juice versus imports) .
B)   Individual perfectly competitive firms don't need to advertise because they already have market power,but the industry would need to advertise.
C)   Government price supports exist for most perfectly competitive producers,so they don't need to advertise,but industry price supports don't generally exist.
D)   Industries advertise because they pay for commercials and it allows consumers to watch TV and listen to the radio for "free."
E)   Individual firms produce perfectly differentiated output,but the industry produces homogeneous output that needs to be differentiated.

Question 5

The difference between price and marginal cost is

Accepted Answer

A)   marginal revenue.
B)   per-unit profit.
C)   average total revenue.
D)   markup.
E)   nothing in the long run; they must be the same.

Question 6

In the long run,in monopolistic competition

Accepted Answer

A)   the demand curve is tangent to the marginal cost curve.
B)   price equals marginal cost.
C)   price equals minimum average total cost.
D)   firms have an incentive to leave.
E)   economic profits are zero.

Question 7

As product differentiation decreases,________ increases.

Accepted Answer

A)   markup
B)   excess capacity
C)   demand elasticity
D)   demand inelasticity
E)   marginal cost

Question 8

Monopolistic competition means that

Accepted Answer

A)   firms are in a monopoly,but they compete.
B)   firms are in perfect competition,but they collude similar to monopolies.
C)   firms differentiate their output,which makes them price makers,but barriers to entry are low or nonexistent.
D)   oligopoly firms collude until they become monopolies.
E)   firms have downward-sloping demand.

Question 9

Despite ________ prices than can be reached under perfect competition,monopolistic competition results in ________ variety than can be reached in any other market.

Accepted Answer

A)   higher; less
B)   higher; greater
C)   lower; less
D)   lower; greater
E)   more inefficient; more excessive

Question 10

When economists say that monopolistic competition drives long-run profits to zero,it implies that the demand curve is ________ to the average total cost curve.

Accepted Answer

A)   secant
B)   tangent
C)   parallel
D)   perpendicular
E)   asymmetrical

Question 11

The demand curve for a monopolistically competitive firm is downward-sloping because of

Accepted Answer

A)   high barriers to entry.
B)   product differentiation.
C)   the lack of firms in the industry.
D)   government regulation.
E)   identical cost curves for each firm.

Question 12

How does a business franchise relate to the monopolistic competition market model?

Accepted Answer

In markets where product differentiation...

Question 13

A monopolistically competitive firm usually charges more than a perfectly competitive firm because

Accepted Answer

A)   it is part of a group of firms that has formally agreed to control the price and the output of a product.
B)   its primary goal is to reap monopoly profits by replacing competition with cooperation.
C)   producing homogenous output is more expensive than producing differentiated output.
D)   producing differentiated output is more expensive than producing homogenous output.
E)   it has a monopoly,but potential entrants exist in the form of contestable markets.

Question 14

Product differentiation

Accepted Answer

A)   refers to firms' attempts to make their products look the same as other products in the industry.
B)   refers to firms' attempts to make real or apparent differences in essentially substitutable products look different in the minds of consumers.
C)   refers to the advantage big firms have in research and development.
D)   is a common characteristic of a perfectly competitive market structure.
E)   is employed only in a monopoly market structure.

Question 15

The marginal revenue of a monopolistically competitive firm will always be

Accepted Answer

A)   less than the price.
B)   more than the price.
C)   the same as the price.
D)   identical to the marginal cost curve.
E)   identical to the average total cost curve.

Question 16

If people found out that a major manufacturer produced its own brand and the store brand at the same factory using the same materials,what would likely happen?

Accepted Answer

Product differentiation would ...

Question 17

List five products that are typically sold in monopolistically competitive markets.

Accepted Answer

Some examples are:DVDs,movies,...

Question 18

Discuss the possibility of government intervention into any markets it determined to be less than competitive in order to enforce competition.

Accepted Answer

With any economic activity,including gov...

Question 19

The fast-food,bottled water,and cereal markets are all examples of

Accepted Answer

A)   perfectly competitive markets.
B)   monopolies.
C)   monopolistically competitive markets.
D)   oligopolies.
E)   homogeneously competitive markets.

Question 20

When a perfectly competitive firm or a monopolistically competitive firm is making zero economic profit

Accepted Answer

A)   the industry is in equilibrium; no firms will want to enter or exit.
B)   those firms who don't differentiate their product sufficiently will want to leave the market.
C)   those firms who wish to differentiate their product more will want to enter the market.
D)   market demand shifts to the right.
E)   the price of the output will rise in the long run.

Exam 12: Monopolistic Competition and Advertising

A monopolistically competitive firm usually charges more than a perfectly competitive firm because

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The demand curve for a monopolistically competitive firm is downward-sloping because of

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How does a business franchise relate to the monopolistic competition market model?

Correct AnswerverifiedIn markets where product differentiation...View AnswerShow Answer

Why would perfectly competitive industries advertise even though individual firms do not?

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Monopolistic competition means that

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A monopolistically competitive firm usually charges less than a monopoly firm because

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As product differentiation decreases,________ increases.

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The fast-food,bottled water,and cereal markets are all examples of

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The difference between price and marginal cost is

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When a perfectly competitive firm or a monopolistically competitive firm is making zero economic profit

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Which of the following is the best example of a monopolistic competitor?

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Discuss the possibility of government intervention into any markets it determined to be less than competitive in order to enforce competition.

Correct AnswerverifiedWith any economic activity,including gov...View AnswerShow Answer

Despite ________ prices than can be reached under perfect competition,monopolistic competition results in ________ variety than can be reached in any other market.

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In the long run,in monopolistic competition

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List five products that are typically sold in monopolistically competitive markets.

Correct AnswerverifiedSome examples are:DVDs,movies,...View AnswerShow Answer

When economists say that monopolistic competition drives long-run profits to zero,it implies that the demand curve is ________ to the average total cost curve.

Correct AnswerverifiedShow Answer

If people found out that a major manufacturer produced its own brand and the store brand at the same factory using the same materials,what would likely happen?

Correct AnswerverifiedProduct differentiation would ...View AnswerShow Answer

Product differentiation

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The marginal revenue of a monopolistically competitive firm will always be

Correct AnswerverifiedShow Answer

Imagine opening a known brand-name company location in a lesser-developed country.Describe the effects on that market.

Correct AnswerverifiedKnown brand names signal a certain quali...View AnswerShow Answer

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In markets where product differentiation...
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With any economic activity,including gov...
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Despite prices than can be reached under perfect competition,monopolistic competition results in variety than can be reached in any other market.

Correct Answer
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Correct Answer
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Correct Answer
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Some examples are:DVDs,movies,...
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Correct Answer
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Product differentiation would ...
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Correct Answer
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Correct Answer
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Correct Answer
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Known brand names signal a certain quali...
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