Question 1

The administrative burden of regulating price in a monopolistically competitive market is

Accepted Answer

A)   small due to economies of scale.
B)   large because price is usually below marginal cost.
C)   large because of the large number of firms that produce differentiated products.
D)   small because firms produce with excess capacity.E) B) and C)
F) A) and D)

Question 2

Firms in a monopolistically competitive market

Accepted Answer

A)   are price takers.
B)   produce an output level that minimizes average total cost in the long run.
C)   maximize profits by producing where price equals marginal cost.
D)   cannot earn economic profits in the long run.E) All of the above
F) B) and C)

Question 3

Figure 16-7
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 16-7.Which of the diagrams illustrates the impact of some existing firms leaving the market?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) C) and D)
F) A) and C)

Question 4

Monopolistic competition is an inefficient market structure because

Accepted Answer

A)   price exceeds marginal cost.
B)   it has a deadweight loss,just as monopoly does.
C)   at the equilibrium,some consumers will value the good at more than the marginal cost of production.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 5

Monopolistically competitive markets differ from perfectly competitive markets due to

Accepted Answer

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

Question 6

Monopolistic competition is a type of

Accepted Answer

A)   oligopoly.
B)   market structure.
C)   price discrimination.
D)   advertising strategy.E) A) and B)
F) A) and C)

Question 7

Which of the following is an example of a monopolistically competitive industry?

Accepted Answer

A)   computer operating systems
B)   tennis balls
C)   movies
D)   cable televisionE) B) and D)
F) None of the above

Question 8

Product differentiation always leads to some measure of market power.

Accepted Answer

A) True 
 B)False

Question 9

In which of the following market structures can firms earn economic profits in the long run?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   monopoly
D)   Both b and c are correct.E) None of the above
F) A) and D)

Question 10

Which of the following statements is not correct?

Accepted Answer

A)   Monopolistic competition is different from monopoly because monopolistic competition is characterized by free entry,whereas monopoly is characterized by barriers to entry.
B)   Both monopolistic competition and oligopoly fall in between the more extreme market structures of competition and monopoly.
C)   Monopolistic competition is different from oligopoly because each seller in monopolistic competition is small relative to the market,whereas each seller can affect the actions of other sellers in an oligopoly.
D)   Both monopolistic competition and perfect competition are characterized by product differentiation.E) A) and B)
F) None of the above

Question 11

An oligopoly is a market in which

Accepted Answer

A)   there are only a few sellers,each offering a product similar or identical to the products offered by other firms in the market.
B)   firms are price takers.
C)   the actions of one seller in the market have no impact on the other sellers' profits.
D)   there are many price-taking firms,each offering a product similar or identical to the products offered by other firms in the market.E) All of the above
F) B) and C)

Question 12

Figure 16-2
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-2.How much profit will the monopolistically competitive firm earn in this situation?

Accepted Answer

A)   a $10 profit
B)   a $200 profit
C)   a $400 profit
D)   No profit,since monopolistically competitive firms never earn economic profit.E) A) and D)
F) None of the above

Question 13

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Accepted Answer

Because its product ...

Question 14

Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Accepted Answer

A)   change in the technology that the firm utilizes.
B)   shift of its demand curve.
C)   shift of its supply curve.
D)   increase in the firm's average cost of production.E) B) and C)
F) C) and D)

Question 15

Advertising that uses celebrity endorsements is most likely intended to

Accepted Answer

A)   increase elasticity of demand for the advertised product.
B)   reduce the ability of markets to allocate resources efficiently.
C)   provide a signal of product quality.
D)   be useful only for psychological effects.E) None of the above
F) All of the above

Question 16

A monopolistically competitive market is characterized by barriers to entry.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Under which of the following market structures would consumers likely receive the most product variety?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   oligopoly
D)   monopolyE) B) and C)
F) C) and D)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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 may be earning economic profits.
C)   firm must be operating at its efficient scale.
D)   Both a and c are correct.E) B) and C)
F) All of the above

Exam 16: Monopolistic Competition

Which of the following statements is not correct?

Correct Answer
verified

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

Correct Answer
verified
Some people argue that celebrity endorse...
View Answer

Monopolistic competition is a type of

Correct Answer
verified

Correct Answer
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Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Correct Answer
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Because its product ...
View Answer

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

Correct Answer
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Which of the following is an example of a monopolistically competitive industry?

Correct Answer
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Product differentiation always leads to some measure of market power.

Correct Answer
verified

Monopolistic competition is an inefficient market structure because

Correct Answer
verified

Under which of the following market structures would consumers likely receive the most product variety?

Correct Answer
verified

Advertising that uses celebrity endorsements is most likely intended to

Correct Answer
verified

The administrative burden of regulating price in a monopolistically competitive market is

Correct Answer
verified

In which of the following market structures can firms earn economic profits in the long run?

Correct Answer
verified

Firms in a monopolistically competitive market

Correct Answer
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An oligopoly is a market in which

Correct Answer
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Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.How much profit will the monopolistically competitive firm earn in this situation?

Correct Answer
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Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Correct Answer
verified

A monopolistically competitive market is characterized by barriers to entry.

Correct Answer
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In the long run,monopolistically competitive firms produce where demand equals average total cost.

Correct Answer
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Monopolistically competitive markets differ from perfectly competitive markets due to

Correct Answer
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Exam 16: Monopolistic Competition

Which of the following statements is not correct?

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

Monopolistic competition is a type of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why does a typical monopolistically competitive firm face a downward-sloping demand curve?

Correct AnswerverifiedBecause its product ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

Product differentiation always leads to some measure of market power.

Correct AnswerverifiedShow Answer

Monopolistic competition is an inefficient market structure because

Correct AnswerverifiedShow Answer

Under which of the following market structures would consumers likely receive the most product variety?

Correct AnswerverifiedShow Answer

Advertising that uses celebrity endorsements is most likely intended to

Correct AnswerverifiedShow Answer

The administrative burden of regulating price in a monopolistically competitive market is

Correct AnswerverifiedShow Answer

In which of the following market structures can firms earn economic profits in the long run?

Correct AnswerverifiedShow Answer

Firms in a monopolistically competitive market

Correct AnswerverifiedShow Answer

An oligopoly is a market in which

Correct AnswerverifiedShow Answer

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.How much profit will the monopolistically competitive firm earn in this situation?

Correct AnswerverifiedShow Answer

Long-run profit earned by a monopolistically competitive firm is driven to the competitive level due to a(n)

Correct AnswerverifiedShow Answer

A monopolistically competitive market is characterized by barriers to entry.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Monopolistically competitive markets differ from perfectly competitive markets due to

Correct AnswerverifiedShow Answer

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Some people argue that celebrity endorse...
View Answer

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Because its product ...
View Answer

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