Question 1

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

Accepted Answer

A) True 
 B)False

Question 2

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

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

Accepted Answer

A)  produces an efficient output level.
B)  chooses the maximum price to maximize profits.
C)  produces where marginal cost is minimized.
D)  chooses a price that exceeds marginal revenue.E) A) and D)
F) B) and C)

Question 5

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Accepted Answer

A) True 
 B)False

Question 6

If a monopolistically competitive firm can increase its level of production and lower its average total cost of production at the same time then

Accepted Answer

A)  the firm has a product-variety opportunity.
B)  the firm has excess capacity.
C)  the firm has a business-stealing opportunity.
D)  the firm is producing a quantity of output higher than its efficient scale of production.E) None of the above
F) B) and C)

Question 7

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

Question 8

Which of the following is not an argument made by critics of advertising?

Accepted Answer

A)  Advertising manipulates people's tastes.
B)  Advertising impedes competition.
C)  Advertising promotes economies of scale.
D)  Advertising increases the perception of product differentiation.E) C) and D)
F) B) and C)

Question 9

When a firm's demand curve is tangent to its average total cost curve, the

Accepted Answer

A)  firm's economic profit is zero.
B)  firm must be earning economic profits.
C)  firm must be incurring economic losses.
D)  firm must be operating at its efficient scale.E) A) and B)
F) A) and C)

Question 10

As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Accepted Answer

Brand-name hotels are a critic...

Question 11

Which of the following might be an example of an economic argument against advertising?
​

Accepted Answer

A)  ​It causes the demand for the good to be more elastic
B)  ​It allows the producer to earn an economic profit in the long run
C)  ​People may be deluded into thinking that a good with a brand name is better than an otherwise identical generic brand
D)  ​The claims made in the ads are almost always falseE) B) and D)
F) A) and B)

Question 12

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

Accepted Answer

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

Question 13

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures features entry in the long run?

Accepted Answer

perfect co...

Question 14

When quality cannot be easily judged in advance, what provides consumers with information about the quality of a product?

Accepted Answer

A)  a brand name
B)  a tie-in
C)  the quantity available for sale
D)  the amount of deadweight lossE) All of the above
F) A) and C)

Question 15

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

Accepted Answer

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

Question 16

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. 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) C) and D)
F) A) and C)

Question 17

When existing firms lose customers and profits due to entry of a new competitor, a

Accepted Answer

A)  predatory-pricing externality occurs.
B)  consumption externality occurs.
C)  business-stealing externality occurs.
D)  product-variety externality occurs.E) A) and D)
F) B) and C)

Question 18

Under which of the following market structures would the highest output of a particular good be produced?

Accepted Answer

A)  perfect competition
B)  monopolistic competition
C)  oligopoly
D)  monopolyE) A) and B)
F) None of the above

Question 19

Figure 16-7 d in panel (d) , it would A) not be maximizing its profit. B) be minimizing its losses. C) be losing market share to other firms in the market. D) be operating at excess capacity." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 16-7. If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d) , it would

Accepted Answer

A)  not be maximizing its profit.
B)  be minimizing its losses.
C)  be losing market share to other firms in the market.
D)  be operating at excess capacity.E) A) and B)
F) B) and D)

Question 20

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...

Exam 16: Monopolistic Competition

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

As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Correct AnswerverifiedBrand-name hotels are a critic...View AnswerShow Answer

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. As the figure is drawn, the firm is in

Correct AnswerverifiedShow Answer

Under which of the following market structures would the highest output of a particular good be produced?

Correct AnswerverifiedShow Answer

When existing firms lose customers and profits due to entry of a new competitor, a

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by many buyers and sellers, product differentiation, and free entry.

Correct AnswerverifiedShow Answer

One characteristic of an oligopoly market structure is:

Correct AnswerverifiedShow Answer

If a monopolistically competitive firm can increase its level of production and lower its average total cost of production at the same time then

Correct AnswerverifiedShow Answer

Which of the following is not an argument made by critics of advertising?

Correct AnswerverifiedShow Answer

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures features entry in the long run?

Correct Answerverifiedperfect co...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

When a firm's demand curve is tangent to its average total cost curve, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following might be an example of an economic argument against advertising? ​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When quality cannot be easily judged in advance, what provides consumers with information about the quality of a product?

Correct AnswerverifiedShow Answer

Advertising during the Super Bowl is an example of information about quality contained primarily in the existence and expense of the advertising.

Correct AnswerverifiedShow Answer

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Correct AnswerverifiedShow Answer

Figure 16-7 -Refer to Figure 16-7. If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d) , it would

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

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

Correct Answer
verified
Brand-name hotels are a critic...
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
perfect co...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following might be an example of an economic argument against advertising?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 16-7 -Refer to Figure 16-7. If a firm in a monopolistically competitive market was producing the level of output depicted as Q_d in panel (d) , it would

Correct Answer
verified

Correct Answer
verified