Question 1

​Deadweight losses are associated with monopolistic competition:

Accepted Answer

A)  ​In the short run, but not the long run
B)  ​In the long run, but not the short run
C)  ​In both the short and long run
D)  In neither the short run nor the long runE) A) and B)
F) None of the above

Question 2

Figure 16-8
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms. 
-Refer to Figure 16-8. Panel (d)  illustrates the change that would occur if existing firms faced

Accepted Answer

A)  long-run economic losses.
B)  a decrease in the diversity of products offered in the market.
C)  new entrants in the market.
D)  firms exiting the market.E) B) and D)
F) B) and C)

Question 3

Monopolistic competition is characterized by i) 
Efficient scale
Ii) 
Markup pricing over marginal cost
Iii) 
Deadweight loss
Iv) 
Excess capacity

Accepted Answer

A)  i)  and ii)  only
B)  ii)  and iv)  only
C)  i) , ii) , and iii)  only
D)  ii) , iii) , and iv)  onlyE) A) and D)
F) None of the above

Question 4

Figure 16-12 
-Refer to Figure 16-12. What, if any, long run adjustment will take place in this industry?

Accepted Answer

The answer of Figure 16-12 
-Refer to Figure 16-12. What,...

Question 5

Figure 16-11 
-Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

Accepted Answer

A)  More firms will enter this market and each firm will have a smaller share of the total market demand, shifting this firm's demand curve to the left.
B)  More firms will enter this market and each firm will have a larger share of the total market demand, shifting this firm's demand to the right.
C)  Firms will exit this market and each firm will have a smaller share of the total market demand, shifting this firm's demand to the left.
D)  Firms will exit this market and each firm will have a larger share of the total market demand, shifting this firm's demand to the right.E) All of the above
F) A) and B)

Question 6

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 $12 loss
B)  a $13 profit
C)  a $25 profit
D)  a $32 profitE) B) and C)
F) B) and D)

Question 7

Figure 16-13 
-Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

Accepted Answer

The answer of Figure 16-13 
-Refer to Figure 16-13. Use...

Question 8

In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Accepted Answer

A)  enhance the social welfare of society.
B)  increase the number of fast-food restaurants.
C)  reduce barriers to entry in imperfect markets.
D)  reduce the competitive nature of local fast-food markets.E) B) and D)
F) A) and C)

Question 9

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures results in production of the welfare-maximizing level of output?

Accepted Answer

The answer of Considering perfect competition, monopolistic competition, and monopoly,...

Question 10

Scenario 16-9
Dean goes to the grocery store to buy chips and soda for a party. He purchases brand name products even though generic versions are available at lower prices. His friend John says he was irrational to spend more for a nearly identical product. His friend Martina agreed with Dean's decision to spend more for the brand name products.
-Refer to Scenario 16-9. If Dean bought the brand name because of advertising he saw for the product, a defender of advertising would say

Accepted Answer

the advertising conv...

Question 11

Of the following market structures, which are considered imperfectly competitive? i.Perfect competition
Ii) Monopoly
IIi) Monopolistic competition
IV) 
Oligopoly

Accepted Answer

A)  III only
B)  II and III
C)  III and IV
D)  II, III, and IVE) B) and C)
F) A) and D)

Question 12

Figure 16-13 
-Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Accepted Answer

The answer of Figure 16-13 
-Refer to Figure 16-13. Which...

Question 13

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

Accepted Answer

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

Question 14

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 the firm has a constant marginal cost of $7 per unit, what price should the firm charge to maximize profit?

Accepted Answer

A)  $10
B)  $14
C)  $18
D)  $22E) A) and B)
F) A) and C)

Question 15

Monopolistically competitive markets may be socially inefficient because

Accepted Answer

A)  most firms produce inferior products.
B)  government programs cannot effectively regulate price.
C)  firms earn zero economic profit.
D)  the market may have too much or too little entry by new firms.E) All of the above
F) C) and D)

Question 16

In the short run, a firm operating in a monopolistically competitive market can earn

Accepted Answer

A)  positive economic profits.
B)  economic losses.
C)  zero economic profits.
D)  All of the above are possible.E) A) and B)
F) B) and D)

Question 17

Scenario 16-6
Ike's Ice Cream has decided to open a new ice cream parlor in Mayville, MS. The market for ice cream parlors is monopolistically competitive.
-Refer to Scenario 16-6. As a result of the new Ike's Ice Cream parlor, existing ice cream shops located in Mayville are likely to experience a

Accepted Answer

A)  business-stealing externality, which harms producers.
B)  business-stealing externality, which benefits producers.
C)  product-variety externality, which harms consumers.
D)  product-variety externality, which benefits consumers.E) None of the above
F) B) and C)

Question 18

Figure 16-4 
-Refer to Figure 16-4. Which of the following will occur in the long run in this industry?

Accepted Answer

A)  Firms will exit this industry.
B)  Firms will enter this industry.
C)  This firm will continue to earn positive economic profits.
D)  This firm will incur losses.E) None of the above
F) All of the above

Question 19

When consumers are exposed to additional choices that result from the introduction of a new product,

Accepted Answer

A)  their satisfaction is likely to be lowered as a result of their having to make additional choices.
B)  a product-variety externality is said to occur.
C)  an advertising externality is said to occur.
D)  consumers are likely to experience negative consumption externalities.E) B) and C)
F) None of the above

Question 20

Scenario 16-2
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-2. If the marginal cost of producing this good is 4, what price would a profit-maximizing monopolist charge for the product?

Accepted Answer

A)  P = 4
B)  P = 10
C)  P = 12
D)  P = 20E) A) and D)
F) B) and D)

Exam 16: Monopolistic Competition

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
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Considering perfect competition, monopolistic competition, and monopoly, which of the market structures results in production of the welfare-maximizing level of output?

Correct Answer
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In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Correct Answer
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Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 4, what price would a profit-maximizing monopolist charge for the product?

Correct Answer
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Figure 16-4 -Refer to Figure 16-4. Which of the following will occur in the long run in this industry?

Correct Answer
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Deadweight losses are associated with monopolistic competition:

Correct Answer
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In the short run, a firm operating in a monopolistically competitive market can earn

Correct Answer
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Correct Answer
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the advertising conv...
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Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much revenue will it earn?

Correct Answer
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When consumers are exposed to additional choices that result from the introduction of a new product,

Correct Answer
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Figure 16-11 -Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

Correct Answer
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Of the following market structures, which are considered imperfectly competitive? i.Perfect competition Ii) Monopoly IIi) Monopolistic competition IV) Oligopoly

Correct Answer
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Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

Correct Answer
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Monopolistically competitive markets may be socially inefficient because

Correct Answer
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Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing price?

Correct Answer
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Scenario 16-6 Ike's Ice Cream has decided to open a new ice cream parlor in Mayville, MS. The market for ice cream parlors is monopolistically competitive. -Refer to Scenario 16-6. As a result of the new Ike's Ice Cream parlor, existing ice cream shops located in Mayville are likely to experience a

Correct Answer
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Monopolistic competition is characterized by i) Efficient scale Ii) Markup pricing over marginal cost Iii) Deadweight loss Iv) Excess capacity

Correct Answer
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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 the firm has a constant marginal cost of $7 per unit, what price should the firm charge to maximize profit?

Correct Answer
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Correct Answer
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Figure 16-12 -Refer to Figure 16-12. What, if any, long run adjustment will take place in this industry?

Correct Answer
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Exam 16: Monopolistic Competition

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

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures results in production of the welfare-maximizing level of output?

Correct AnswerverifiedShow Answer

In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Correct AnswerverifiedShow Answer

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 4, what price would a profit-maximizing monopolist charge for the product?

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to Figure 16-4. Which of the following will occur in the long run in this industry?

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​Deadweight losses are associated with monopolistic competition:

Correct AnswerverifiedShow Answer

In the short run, a firm operating in a monopolistically competitive market can earn

Correct AnswerverifiedShow Answer

Correct Answerverifiedthe advertising conv...View AnswerShow Answer

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

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When consumers are exposed to additional choices that result from the introduction of a new product,

Correct AnswerverifiedShow Answer

Figure 16-11 -Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

Correct AnswerverifiedShow Answer

Of the following market structures, which are considered imperfectly competitive? i.Perfect competition Ii) Monopoly IIi) Monopolistic competition IV) Oligopoly

Correct AnswerverifiedShow Answer

Figure 16-13 -Refer to Figure 16-13. Use the letters to identify the area of total revenue for this firm.

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Monopolistically competitive markets may be socially inefficient because

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Figure 16-13 -Refer to Figure 16-13. Which letter represents the profit-maximizing price?

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Scenario 16-6 Ike's Ice Cream has decided to open a new ice cream parlor in Mayville, MS. The market for ice cream parlors is monopolistically competitive. -Refer to Scenario 16-6. As a result of the new Ike's Ice Cream parlor, existing ice cream shops located in Mayville are likely to experience a

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by i) Efficient scale Ii) Markup pricing over marginal cost Iii) Deadweight loss Iv) Excess capacity

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 the firm has a constant marginal cost of $7 per unit, what price should the firm charge to maximize profit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 16-12 -Refer to Figure 16-12. What, if any, long run adjustment will take place in this industry?

Correct AnswerverifiedShow Answer

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Deadweight losses are associated with monopolistic competition:

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the advertising conv...
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