Question 1

​Which of the following goods is most likely to be associated with monopolistic competition?

Accepted Answer

A)  ​Gasoline
B)  ​Milk
C)  ​Cookies
D)  ​WheatE) A) and D)
F) None of the above

Question 2

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Accepted Answer

The answer of Due to free entry and exit in...

Question 3

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

Accepted Answer

The answer of Figure 16-14 
-Refer to Figure 16-14. Which...

Question 4

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 L?

Accepted Answer

A)  about 99%
B)  about 77%
C)  about 41%
D)  about 16%E) B) and C)
F) A) and C)

Question 5

Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

Accepted Answer

Some people argue that celebrity endorse...

Question 6

Figure 16-11 
-Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Accepted Answer

firms will enter
pri...

Question 7

When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,

Accepted Answer

A)  its average revenue will equal its marginal cost.
B)  its marginal revenue will exceed its marginal cost.
C)  it will be earning positive economic profits.
D)  its demand curve will be tangent to its average total cost curve.E) C) and D)
F) A) and C)

Question 8

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. In response to the situation represented by the figure, we would expect

Accepted Answer

A)  new firms to enter the market.
B)  some of the firms that are currently in the market to exit.
C)  this firm's profit to move from its current value toward a positive value.
D)  None of the above are correct.E) None of the above
F) B) and C)

Question 9

In a long-run equilibrium, firms in both perfectly competitive markets and monopolistically competitive markets produce a quantity below the efficient scale of production.

Accepted Answer

A) True 
 B)False

Question 10

Which market structure(s) is(are) considered highly concentrated?

Accepted Answer

The answer of Which market structure(s) is(are) considered highly concentrated?...

Question 11

Monopolistic competition is an inefficient market structure because

Accepted Answer

A)  marginal revenue equals marginal cost.
B)  it has a deadweight loss, just as monopoly does.
C)  long-run profits are zero due to free entry.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 12

Monopolistically competitive markets differ from perfectly competitive markets due to (i) 
The number of sellers.
(ii) 
The barriers to entry.
(iii) 
The product differentiation among the sellers.

Accepted Answer

A)  (i)  only
B)  (iii)  only
C)  (i)  and (iii)  only
D)  (ii)  and (iii)  onlyE) A) and B)
F) A) and C)

Question 13

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. As the figure is drawn, the firm is in

Accepted Answer

A)  a short-run equilibrium but it is not in a long-run equilibrium.
B)  a long-run equilibrium but it is not in a short-run equilibrium.
C)  a short-run equilibrium as well as a long-run equilibrium.
D)  neither a short-run equilibrium nor a long-run equilibrium.E) All of the above
F) A) and C)

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 A
B)  Industry B
C)  Industry C
D)  Industry DE) A) and D)
F) None of the above

Question 15

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 C)
F) A) and D)

Question 16

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) A) and B)
F) A) and C)

Question 17

Figure 16-2. The figure is drawn for a monopolistically competitive firm.

-Refer to Figure 16-2. The firm's profit-maximizing level of output is

Accepted Answer

A)  16 units.
B)  24 units.
C)  32 units.
D)  48 units.E) A) and C)
F) All of the above

Question 18

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) A) and B)
F) A) and C)

Question 19

Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because

Accepted Answer

A)  there are many other sellers in the market.
B)  there are very few other sellers in the market.
C)  the firm's product is different from those offered by other firms in the market.
D)  the firm faces the threat of entry into the market by new firms.E) None of the above
F) A) and B)

Question 20

A profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market because the firm in the monopolistically competitive market

Accepted Answer

A)  chooses its profit-maximizing quantity where marginal revenue equals marginal cost.
B)  sells its product in a highly-concentrated market.
C)  faces a downward-sloping demand curve for its product.
D)  can earn profits in the long run.E) None of the above
F) All of the above

Exam 16: Monopolistic Competition

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. In response to the situation represented by the figure, we would expect

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 16-2 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 L?

Correct AnswerverifiedShow Answer

In a long-run equilibrium, firms in both perfectly competitive markets and monopolistically competitive markets produce a quantity below the efficient scale of production.

Correct AnswerverifiedShow Answer

In the long run,

Correct AnswerverifiedShow Answer

When a profit-maximizing firm in a monopolistically competitive market is producing the long-run equilibrium quantity,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Due to free entry and exit in monopolistic competition, in the long run price must be equal to

Correct AnswerverifiedShow Answer

Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

Correct AnswerverifiedSome people argue that celebrity endorse...View AnswerShow 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

A profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market because the firm in the monopolistically competitive market

Correct AnswerverifiedShow Answer

Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because

Correct AnswerverifiedShow Answer

Monopolistic competition is an inefficient market structure because

Correct AnswerverifiedShow Answer

Monopolistically competitive markets differ from perfectly competitive markets due to (i) The number of sellers. (ii) The barriers to entry. (iii) The product differentiation among the sellers.

Correct AnswerverifiedShow Answer

Which market structure(s) is(are) considered highly concentrated?

Correct AnswerverifiedShow Answer

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. As the figure is drawn, the firm is in

Correct AnswerverifiedShow Answer

Figure 16-11 -Refer to Figure 16-11. What, if any, long run adjustment will occur in this industry?

Correct Answerverifiedfirms will enterpri...View AnswerShow Answer

​Which of the following goods is most likely to be associated with monopolistic competition?

Correct AnswerverifiedShow Answer

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. The firm's profit-maximizing level of output is

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

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
Some people argue that celebrity endorse...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
firms will enter
pri...
View Answer

Which of the following goods is most likely to be associated with monopolistic competition?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified