Question 1

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Accepted Answer

business-s...

Question 2

The debate over the efficiency of markets in which products with brand names are sold

Accepted Answer

A)   is framed by the role of regulation in advertising.
B)   is likely to be resolved by reference to anecdotal evidence.
C)   hinges on whether consumers are rational in their choices.
D)   hinges on the effectiveness of advertising that identifies price differences.E) None of the above
F) B) and C)

Question 3

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Accepted Answer

A)   more money is spent on Mucinex than on Grainger drill presses.
B)   the market for Mucinex is more highly differentiated than the market for Grainger drill presses.
C)   Grainger has lower costs of production than Mucinex.
D)   Mucinex operates in an oligopoly, while Grainger operates in a monopolistically competitive market.E) None of the above
F) B) and C)

Question 4

The breakfast cereal industry, with its concentration ratio of 80%, would best be described as a(n)

Accepted Answer

A)   perfectly competitive market.
B)   monopolistically competitive market.
C)   oligopoly.
D)   monopoly.E) A) and D)
F) C) and D)

Question 5

Scenario 16-5
McDonald's restaurants has recently announced intentions to open a new restaurant in Smalltown, Indiana. Assume that the fast-food restaurant market in Smalltown is characterized by monopolistic competition.
-Refer to Scenario 16-5. As a result of the new McDonald's, existing fast food restaurants in Smalltown are likely to

Accepted Answer

A)   suffer from a product-variety externality.
B)   suffer from a business-stealing externality.
C)   increase their production to achieve the efficient scale.
D)   Both b and c are correct.E) None of the above
F) A) and B)

Question 6

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
 
-Refer to Table 16-2. What is the concentration ratio for Industry J?

Accepted Answer

A)   about 14%
B)   about 48%
C)   about 74%
D)   about 80%E) B) and D)
F) A) and C)

Question 7

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

Accepted Answer

product-va...

Question 8

Which of the following correctly lists the products in order from most advertised to least advertised?

Accepted Answer

A)   soft drinks, breakfast cereals, dog food
B)   corn, dog food, communication satellites
C)   dog food, communication satellites, corn
D)   wheat, corn, crude oilE) A) and B)
F) A) and C)

Question 9

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 10

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Accepted Answer

A)   superior quality.
B)   inferior or mediocre quality.
C)   low prices.
D)   limited availability.E) B) and D)
F) C) and D)

Question 11

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
 
-Refer to Table 16-2. Which industry has the lowest concentration ratio?

Accepted Answer

A)   Industry J
B)   Industry K
C)   Industry L
D)   Industry ME) A) and C)
F) A) and B)

Question 12

Figure 16-12 
-Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Accepted Answer

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

Question 13

If advertising reduces a consumer's price sensitivity between identical goods, it is likely to

Accepted Answer

A)   increase the elasticity of demand for differentiated products.
B)   enhance competition and encourage more product diversity.
C)   reduce competition and reduce social welfare.
D)   encourage the consumption of all homogenous goods.E) All of the above
F) B) and C)

Question 14

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Accepted Answer

A)   perfectly competitive market.
B)   monopolistically competitive market.
C)   oligopoly.
D)   monopoly.E) A) and B)
F) A) and C)

Question 15

A monopolistically competitive firm chooses the quantity to produce where

Accepted Answer

A)   price equals marginal cost.
B)   demand equals marginal cost.
C)   marginal revenue equals marginal cost.
D)   Both a and c are correct.E) A) and B)
F) B) and C)

Question 16

Figure 16-11 
-Refer to Figure 16-11. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

Accepted Answer

A)   $250.
B)   $500
C)   $562.50.
D)   $1250.E) A) and B)
F) A) and C)

Question 17

One characteristic of an oligopoly market structure is:

Accepted Answer

A)   firms in the industry are typically characterized by very diverse product lines.
B)   firms in the industry have some degree of market power.
C)   products typically sell at a price equal to their marginal cost of production.
D)   the actions of one seller have no impact on the profitability of other sellers.E) C) and D)
F) All of the above

Question 18

When a new firm considers entering a market, it takes into account only the profit it would make. What are the two external effects that occur in the market that the firm does not consider?

Accepted Answer

product-variety exte...

Question 19

A downward-sloping demand curve

Accepted Answer

A)   is a feature of all monopolistically competitive firms.
B)   means that the firm in question will never experience a zero profit.
C)   causes marginal revenue to exceed price.
D)   prohibits firms from earning positive economic profits in the long run.E) All of the above
F) A) and B)

Question 20

In the long run, monopolistically competitive firms produce where demand equals marginal cost.

Accepted Answer

A) True 
 B)False

Exam 16: Monopolistic Competition

A monopolistically competitive firm chooses the quantity to produce where

Correct Answer
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Correct Answer
verified

The debate over the efficiency of markets in which products with brand names are sold

Correct Answer
verified

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Correct Answer
verified

A downward-sloping demand curve

Correct Answer
verified

Which of the following correctly lists the products in order from most advertised to least advertised?

Correct Answer
verified

In the long run, monopolistically competitive firms produce where demand equals marginal cost.

Correct Answer
verified

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Correct Answer
verified

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Correct Answer
verified

Figure 16-11 -Refer to Figure 16-11. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

Correct Answer
verified

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. What is the concentration ratio for Industry J?

Correct Answer
verified

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Correct Answer
verified

If advertising reduces a consumer's price sensitivity between identical goods, it is likely to

Correct Answer
verified

Figure 16-12 -Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Correct Answer
verified

The breakfast cereal industry, with its concentration ratio of 80%, would best be described as a(n)

Correct Answer
verified

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Correct Answer
verified
business-s...
View Answer

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry has the lowest concentration ratio?

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

Correct Answer
verified
product-va...
View Answer

One characteristic of an oligopoly market structure is:

Correct Answer
verified

When a new firm considers entering a market, it takes into account only the profit it would make. What are the two external effects that occur in the market that the firm does not consider?

Correct Answer
verified
product-variety exte...
View Answer

Exam 16: Monopolistic Competition

A monopolistically competitive firm chooses the quantity to produce where

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The debate over the efficiency of markets in which products with brand names are sold

Correct AnswerverifiedShow Answer

The commercial jetliner industry consisting of Boeing and Airbus would best be described as a (an)

Correct AnswerverifiedShow Answer

A downward-sloping demand curve

Correct AnswerverifiedShow Answer

Which of the following correctly lists the products in order from most advertised to least advertised?

Correct AnswerverifiedShow Answer

In the long run, monopolistically competitive firms produce where demand equals marginal cost.

Correct AnswerverifiedShow Answer

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Correct AnswerverifiedShow Answer

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Correct AnswerverifiedShow Answer

Figure 16-11 -Refer to Figure 16-11. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

Correct AnswerverifiedShow Answer

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. What is the concentration ratio for Industry J?

Correct AnswerverifiedShow Answer

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Correct AnswerverifiedShow Answer

If advertising reduces a consumer's price sensitivity between identical goods, it is likely to

Correct AnswerverifiedShow Answer

Figure 16-12 -Refer to Figure 16-12. If this firm minimized cost, how much output will it produce?

Correct AnswerverifiedShow Answer

The breakfast cereal industry, with its concentration ratio of 80%, would best be described as a(n)

Correct AnswerverifiedShow Answer

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Correct Answerverifiedbusiness-s...View AnswerShow Answer

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry has the lowest concentration ratio?

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedproduct-va...View AnswerShow Answer

One characteristic of an oligopoly market structure is:

Correct AnswerverifiedShow Answer

When a new firm considers entering a market, it takes into account only the profit it would make. What are the two external effects that occur in the market that the firm does not consider?

Correct Answerverifiedproduct-variety exte...View AnswerShow Answer

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business-s...
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product-va...
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product-variety exte...
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