Question 1

A typical firm in the U.S.economy would be classified as

Accepted Answer

A)   perfectly competitive.
B)   imperfectly competitive.
C)   a duopolist.
D)   an oligopolist.E) A) and B)
F) C) and D)

Question 2

Figure 16-4 
-Refer to Figure 16-4.Panel b is consistent with a firm in a monopolistically competitive market that is

Accepted Answer

A)   not in long-run equilibrium.
B)   in long-run equilibrium.
C)   producing its efficient scale of output.
D)   earning a positive economic profit.E) B) and C)
F) A) and C)

Question 3

Excess capacity is

Accepted Answer

A)   an example of the inefficiencies of monopolistically competitive markets.
B)   a short-run problem but not a long-run problem.
C)   a characteristic of rising average total cost curves.
D)   Both a and b are correct.E) A) and C)
F) B) and C)

Question 4

Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.
 
-Refer to Table 16-5.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

Accepted Answer

A)   either 3 or 4
B)   either 4 or 5
C)   either 5 or 6
D)   either 6 or 7E) A) and B)
F) A) and C)

Question 5

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Accepted Answer

A)   the number of sellers in the market
B)   the freedom of entry and exit by firms in the market
C)   the size of firms in the market
D)   product differentiationE) B) and C)
F) A) and B)

Question 6

The primary claim of defenders of advertising is that it

Accepted Answer

A)   conveys information about firm profitability.
B)   is psychological rather than informational.
C)   enhances the information available to consumers.
D)   reduces the elasticity of demand for a firm's product.E) B) and C)
F) C) and D)

Question 7

Entry by new firms into a monopolistically competitive market

Accepted Answer

A)   creates additional consumer surplus.
B)   imposes a positive externality on existing firms.
C)   leads to the same externalities that are observed when new firms enter a perfectly competitive market.
D)   increases the demand for existing firms' products.E) C) and D)
F) All of the above

Question 8

Which of the following represents the best government policy to reduce the deadweight loss associated with a monopolistically competitive market?

Accepted Answer

A)   The government should regulate firms in a manner similar to natural monopolies.
B)   The government should encourage more firms to enter the industry because without government intervention,there are likely to be "too few" firms.
C)   The government should encourage some firms to exit the industry because without government intervention,there are likely to be "too many" firms.
D)   There is no government policy that can reduce deadweight loss without creating other problems.E) A) and C)
F) B) and D)

Question 9

Professional organizations and producer groups have an incentive to

Accepted Answer

A)   restrict advertising in order to enhance competition on the basis of price.
B)   restrict advertising in order to reduce competition on the basis of price.
C)   encourage advertising in order to reduce competition on the basis of price.
D)   encourage advertising in order to enhance competition on the basis of price.E) None of the above
F) C) and D)

Question 10

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Accepted Answer

A) True 
 B)False

Question 11

For a monopolistically competitive firm,

Accepted Answer

A)   marginal revenue and price are the same.
B)   average revenue and price are the same.
C)   at the profit-maximizing quantity of output,price equals marginal cost.
D)   at the profit-maximizing quantity of output,price equals the minimum of average total cost.E) A) and D)
F) C) and D)

Question 12

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

Accepted Answer

A)   produces an output level where marginal revenue equals average total cost.
B)   maximizes revenues as well as profits.
C)   can earn zero economic profits.
D)   sets price equal to marginal cost.E) None of the above
F) C) and D)

Question 13

Defenders of advertising argue that firms use advertising as a signal of quality,even if the advertising delivers little helpful information about the product.

Accepted Answer

A) True 
 B)False

Question 14

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 is the most competitive?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) A) and B)
F) A) and C)

Question 15

Imperfectly competitive firms are characterized by

Accepted Answer

A)   horizontal demand curves.
B)   standardized products.
C)   a large number of small firms.
D)   price making ability.E) None of the above
F) B) and D)

Question 16

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Accepted Answer

A)   firms would most likely experience economic losses.
B)   firms would also operate at their efficient scale.
C)   new firms would likely to enter the market.
D)   the most efficient firms would not likely to be affected.E) None of the above
F) B) and D)

Question 17

Suppose for some firm that average total cost is minimized at Q1 units of output.For a monopolistically competitive firm in long-run equilibrium,Q1

Accepted Answer

A)   is also the level of output at which marginal cost equals average total cost.
B)   exceeds the level of output at which there is a point of tangency between the demand curve and the average total cost curve.
C)   exceeds the level of output at which marginal revenue equals marginal cost.
D)   All of the above are correct.E) A) and C)
F) All of the above

Question 18

Figure 16-2
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

Accepted Answer

A)   P=$60,Q=20 units,profit=$200
B)   P=$80,Q=20 units,profit=$200
C)   P=$75,Q=25 units,profit=$100
D)   P=$60,Q=40 units,profit=$0E) None of the above
F) C) and D)

Question 19

A monopolistically competitive firm has the following cost structure:

The firm faces the following demand curve:

If the government forces this firm to produce at its efficient scale,it will

Accepted Answer

A)   produce 3 units and make $9.
B)   produce 4 units and make $6.
C)   produce 5 units and lose $5.
D)   produce 7 units and lose $49.E) A) and B)
F) A) and C)

Question 20

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 D?

Accepted Answer

A)   about 13%
B)   about 35%
C)   about 45%
D)   about 63%E) A) and B)
F) A) and C)

Exam 16: Monopolistic Competition

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: If the government forces this firm to produce at its efficient scale,it will

Correct Answer
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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 D?

Correct Answer
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Suppose for some firm that average total cost is minimized at Q₁ units of output.For a monopolistically competitive firm in long-run equilibrium,Q₁

Correct Answer
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Professional organizations and producer groups have an incentive to

Correct Answer
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Entry by new firms into a monopolistically competitive market

Correct Answer
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Imperfectly competitive firms are characterized by

Correct Answer
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For a monopolistically competitive firm,

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

Correct Answer
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If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Correct Answer
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Which of the following conditions distinguishes monopolistic competition from perfect competition?

Correct Answer
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Figure 16-4 -Refer to Figure 16-4.Panel b is consistent with a firm in a monopolistically competitive market that is

Correct Answer
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Correct Answer
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Defenders of advertising argue that firms use advertising as a signal of quality,even if the advertising delivers little helpful information about the product.

Correct Answer
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Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

Correct Answer
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Excess capacity is

Correct Answer
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The primary claim of defenders of advertising is that it

Correct Answer
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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 is the most competitive?

Correct Answer
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Which of the following represents the best government policy to reduce the deadweight loss associated with a monopolistically competitive market?

Correct Answer
verified

A typical firm in the U.S.economy would be classified as

Correct Answer
verified

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Correct Answer
verified

Exam 16: Monopolistic Competition

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: If the government forces this firm to produce at its efficient scale,it will

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 D?

Correct AnswerverifiedShow Answer

Suppose for some firm that average total cost is minimized at Q1 units of output.For a monopolistically competitive firm in long-run equilibrium,Q1

Correct AnswerverifiedShow Answer

Professional organizations and producer groups have an incentive to

Correct AnswerverifiedShow Answer

Entry by new firms into a monopolistically competitive market

Correct AnswerverifiedShow Answer

Imperfectly competitive firms are characterized by

Correct AnswerverifiedShow Answer

For a monopolistically competitive firm,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Correct AnswerverifiedShow Answer

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Correct AnswerverifiedShow Answer

Figure 16-4 -Refer to Figure 16-4.Panel b is consistent with a firm in a monopolistically competitive market that is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Defenders of advertising argue that firms use advertising as a signal of quality,even if the advertising delivers little helpful information about the product.

Correct AnswerverifiedShow Answer

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.What is the profit-maximizing price,quantity,and resulting profit?

Correct AnswerverifiedShow Answer

Excess capacity is

Correct AnswerverifiedShow Answer

The primary claim of defenders of advertising is that it

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.Which industry is the most competitive?

Correct AnswerverifiedShow Answer

Which of the following represents the best government policy to reduce the deadweight loss associated with a monopolistically competitive market?

Correct AnswerverifiedShow Answer

A typical firm in the U.S.economy would be classified as

Correct AnswerverifiedShow Answer

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Correct AnswerverifiedShow Answer

Correct Answer
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Suppose for some firm that average total cost is minimized at Q₁ units of output.For a monopolistically competitive firm in long-run equilibrium,Q₁

Correct Answer
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