Question 1

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 this firm has a constant marginal cost of $7, what is the profit-maximizing level of output?

Accepted Answer

The answer of Table 16-7
A monopolistically competitive firm faces the...

Question 2

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

Accepted Answer

A)  (i)  only
B)  (i)  and (ii)  only
C)  (ii)  and (iii)  only
D)  (i) , (ii) , and (iii) E) A) and D)
F) All of the above

Question 3

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

Accepted Answer

A)  not in long-run equilibrium.
B)  in long-run equilibrium.
C)  producing its efficient scale of output.
D)  earning a positive economic profit.E) B) and C)
F) None of the above

Question 4

If a firm in a monopolistically competitive market successfully uses advertising to decrease the elasticity of demand for its product, the firm will

Accepted Answer

A)  be able to increase its markup over marginal cost.
B)  eventually have to reduce price to remain competitive.
C)  increase the welfare of society.
D)  reduce its average total cost.E) A) and B)
F) C) and D)

Question 5

To maximize its profit, a monopolistically competitive firm chooses its level of output by looking for the level of output at which

Accepted Answer

A)  price equals marginal cost.
B)  marginal revenue equals marginal cost.
C)  average total cost is minimized.
D)  All of the above are correct.E) B) and C)
F) A) and C)

Question 6

Figure 16-14 
-Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Accepted Answer

A)  ABC
B)  IJK
C)  BHJ
D)  BCIJE) None of the above
F) All of the above

Question 7

A monopolistically competitive market is characterized by barriers to entry.

Accepted Answer

A) True 
 B)False

Question 8

Figure 16-12 
-Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

Accepted Answer

The answer of Figure 16-12 
-Refer to Figure 16-12. When...

Question 9

The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 10

​In which of the following market structures can a firm earn an economic profit in the short run?

Accepted Answer

A)  ​Perfect competition
B)  ​Monopolistic competition
C)  ​Monopoly
D)  ​All of these market structures can earn an economic profit in the short runE) A) and B)
F) C) and D)

Question 11

A similarity between monopoly and monopolistic competition is that in both market structures

Accepted Answer

A)  strategic interactions among sellers are important.
B)  there are a small number of sellers.
C)  sellers are price makers rather than price takers.
D)  there are only a few buyers but many sellers.E) A) and D)
F) C) and D)

Question 12

A new Mexican restaurant opened in the town of Manchester. The residents of the town are

Accepted Answer

A)  happy because of the product-variety externality, while other restaurant owners are unhappy because of the business-stealing externality.
B)  happy because of the business-stealing externality, while other restaurant owners are unhappy because of the product-variety externality.
C)  unhappy because of the product-variety externality, while other restaurant owners are happy because of the business-stealing externality.
D)  unhappy because of the business-stealing externality, while other restaurant owners are happy because of the product-variety externality.E) A) and C)
F) A) and B)

Question 13

Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to

Accepted Answer

A)  decrease and average total cost to increase.
B)  decrease and average total cost to decrease.
C)  remain unchanged as Joe's is doing the best it can.
D)  increase and average total costs to decrease.E) A) and B)
F) B) and C)

Question 14

In the long run,

Accepted Answer

A)  monopolistically competitive firms earn a higher profit than perfectly competitive firms because monopolistically competitive firms have some monopoly power.
B)  monopolistically competitive firms produce a higher output than perfectly competitive firms because competition drives the perfectly competitive firms' output down.
C)  both monopolistically competitive and perfectly competitive firms produce where P = MC.
D)  both monopolistically competitive and perfectly competitive firms produce where P = ATC.E) None of the above
F) A) and D)

Question 15

As firms exit a monopolistically competitive market, profits of remaining firms

Accepted Answer

A)  decline, and product diversity in the market decreases.
B)  decline, and product diversity in the market increases.
C)  rise, and product diversity in the market decreases.
D)  rise, and product diversity in the market increases.E) B) and D)
F) C) and D)

Question 16

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Accepted Answer

A)  0.5
B)  2
C)  10
D)  20E) A) and B)
F) A) and C)

Question 17

Because monopolistically competitive firms produce differentiated products, each firm

Accepted Answer

A)  faces a demand curve that is horizontal.
B)  faces a demand curve that is vertical.
C)  has no control over product price.
D)  has some control over product price.E) C) and D)
F) A) and C)

Question 18

Figure 16-14 
-Refer to Figure 16-14. Which of the following represents the excess capacity of this firm?

Accepted Answer

A)  BJ
B)  GH
C)  LM
D)  There is no excess capacity.E) A) and B)
F) B) and C)

Question 19

Figure 16-11 
-Refer to Figure 16-11. If this firm profit-maximizes, how much cost will it incur?

Accepted Answer

The answer of Figure 16-11 
-Refer to Figure 16-11. If...

Question 20

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. The firm's maximum profit is

Accepted Answer

A)  $-7,000.
B)  $-5,000.
C)  $-2,000.
D)  The firm's maximum profit cannot be determined from the figure.E) All of the above
F) A) and D)

Exam 16: Monopolistic Competition

To maximize its profit, a monopolistically competitive firm chooses its level of output by looking for the level of output at which

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

​In which of the following market structures can a firm earn an economic profit in the short run?

Correct AnswerverifiedShow Answer

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Correct AnswerverifiedShow Answer

Because monopolistically competitive firms produce differentiated products, each firm

Correct AnswerverifiedShow Answer

Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to

Correct AnswerverifiedShow Answer

A monopolistically competitive market is characterized by barriers to entry.

Correct AnswerverifiedShow Answer

In the long run,

Correct AnswerverifiedShow Answer

Figure 16-12 -Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

Correct AnswerverifiedShow Answer

If a firm in a monopolistically competitive market successfully uses advertising to decrease the elasticity of demand for its product, the firm will

Correct AnswerverifiedShow Answer

As firms exit a monopolistically competitive market, profits of remaining firms

Correct AnswerverifiedShow Answer

A new Mexican restaurant opened in the town of Manchester. The residents of the town are

Correct AnswerverifiedShow Answer

The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

Correct AnswerverifiedShow Answer

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. The firm's maximum profit is

Correct AnswerverifiedShow Answer

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much cost will it incur?

Correct AnswerverifiedShow Answer

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 this firm has a constant marginal cost of $7, what is the profit-maximizing level of output?

Correct AnswerverifiedShow Answer

Figure 16-14 -Refer to Figure 16-14. The deadweight loss from production for this firm is represented by which of the following areas?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 16-14 -Refer to Figure 16-14. Which of the following represents the excess capacity of this firm?

Correct AnswerverifiedShow Answer

A similarity between monopoly and monopolistic competition is that in both market structures

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

In which of the following market structures can a firm earn an economic profit in the short run?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified