Question 1

A monopolistically competitive firm

Accepted Answer

A)   has the usual deadweight loss of monopoly pricing.
B)   experiences a zero profit in a long-run equilibrium.
C)   is said to have excess capacity.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 2

Monopolistic competition is considered by some to be inefficient because

Accepted Answer

A)   price exceeds marginal cost.
B)   output is excessive.
C)   long-run profits are positive.
D)   barriers to entry limit the number of firms in the market.E) A) and D)
F) None of the above

Question 3

Your company has recently requested that you travel to Dhaka,Bangladesh,to work on negotiations for a new factory to be located in one of the port cities.Your travel agent provides a list of several hundred local hotels and a Sheraton.In this case,the Sheraton brand-name is likely to be used as a signal of

Accepted Answer

A)   perceived differences that are not likely to exist among your various options.
B)   quality when quality cannot be easily judged.
C)   inefficiency in markets characterized by recognizable brand names.
D)   the quality of general lodging accommodations in Dhaka.E) A) and B)
F) All of the above

Question 4

A monopolistically competitive market

Accepted Answer

A)   usually has too many firms,reducing the economic profit of each firm to zero.
B)   usually has too few firms,reducing the product variety for consumers.
C)   may have too many or too few firms,and the government can intervene to achieve the optimal number of firms.
D)   may have too many or too few firms,but the government can do little to rectify the situation.E) A) and B)
F) B) and C)

Question 5

In which of the following market structures do firms produce the welfare-maximizing level of output?

Accepted Answer

A)   perfect competition
B)   monopolistic competition
C)   monopoly
D)   Both a and b are correct.E) A) and B)
F) A) and C)

Question 6

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.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) A) and B)
F) All of the above

Question 7

In the short run,a firm in a monopolistically competitive market operates much like a

Accepted Answer

A)   firm in a perfectly competitive market.
B)   firm in an oligopoly.
C)   monopolist.
D)   monopsonist.E) C) and D)
F) B) and D)

Question 8

A monopolistically competitive market is like a monopoly in that

Accepted Answer

A)   both market structures feature easy entry by new firms in the long run.
B)   the main objective of firms in both market structures is something other than profit maximization.
C)   firms in both market structures produce the welfare-maximizing level of output.
D)   firms in both market structures set price above marginal cost.E) A) and B)
F) All of the above

Question 9

A firm is a price taker

Accepted Answer

A)   only when the market is perfectly competitive.
B)   only when the market is perfectly competitive or monopolistic.
C)   only when the market is perfectly competitive or monopolistically competitive.
D)   when the market is perfectly competitive,monopolistically competitive,or monopolistic.E) A) and B)
F) A) and C)

Question 10

Table 16-3
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-3.What price will this firm charge to maximize profit?

Accepted Answer

A)   $6
B)   $7
C)   $8
D)   $9E) B) and C)
F) None of the above

Question 11

When a monopolistically competitive firm raises its price,

Accepted Answer

A)   quantity demanded falls to zero.
B)   quantity demanded declines but not to zero.
C)   the market supply curve shifts outward.
D)   quantity demanded remains constant.E) All of the above
F) A) and C)

Question 12

The higher the concentration ratio,the

Accepted Answer

A)   more control an individual firm has to set prices.
B)   more competitive the industry.
C)   less competitive the industry.
D)   Both a and c are correct.E) All of the above
F) None of the above

Question 13

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 14

A monopolistically competitive industry is characterized by

Accepted Answer

A)   many firms selling products that are similar but not identical.
B)   many firms selling identical products.
C)   a few firms selling products that are similar but not identical.
D)   a few firms selling highly different products.E) B) and D)
F) B) and C)

Question 15

Which of the following correctly lists the products in order from most advertised to least advertised?

Accepted Answer

A)   soft drinks,breakfast cereals,dog food
B)   corn,dog food,communication satellites
C)   dog food,communication satellites,corn
D)   wheat,corn,crude oilE) None of the above
F) All of the above

Question 16

Which of the following best describes the idea of excess capacity in monopolistic competition?

Accepted Answer

A)   Firms produce more output than is socially desirable.
B)   The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve.
C)   Due to product differentiation,firms choose output levels where price equals average total cost.
D)   Firms keep some surplus output on hand in case there is a shift in the demand for their product.E) C) and D)
F) A) and B)

Question 17

The product-variety externality is associated with the

Accepted Answer

A)   producer surplus that accrues to incumbent firms in a monopolistically competitive industry.
B)   loss of consumer surplus from exposure to additional advertising.
C)   consumer surplus that is generated from the introduction of a new product.
D)   opportunity cost of firms exiting a monopolistically competitive industry.E) B) and C)
F) A) and D)

Question 18

Because a monopolistically competitive firm has some market power,in the long-run the price of its product exceeds its

Accepted Answer

A)   average revenue.
B)   average total cost.
C)   marginal cost.
D)   profit per unit.E) B) and C)
F) A) and D)

Question 19

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Accepted Answer

A) True 
 B)False

Question 20

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Accepted Answer

Monopolistically competitive f...

Exam 16: Monopolistic Competition

A monopolistically competitive market is like a monopoly in that

Correct Answer
verified

A monopolistically competitive market

Correct Answer
verified

In which of the following market structures do firms produce the welfare-maximizing level of output?

Correct Answer
verified

Table 16-3 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-3.What price will this firm charge to maximize profit?

Correct Answer
verified

In the short run,a firm in a monopolistically competitive market operates much like a

Correct Answer
verified

Because a monopolistically competitive firm has some market power,in the long-run the price of its product exceeds its

Correct Answer
verified

When a monopolistically competitive firm raises its price,

Correct Answer
verified

A firm is a price taker

Correct Answer
verified

The higher the concentration ratio,the

Correct Answer
verified

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 Answer
verified
Brand-name hotels are a critic...
View Answer

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Correct Answer
verified

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Correct Answer
verified
Monopolistically competitive f...
View Answer

The product-variety externality is associated with the

Correct Answer
verified

Monopolistic competition is considered by some to be inefficient because

Correct Answer
verified

A monopolistically competitive firm

Correct Answer
verified

Which of the following best describes the idea of excess capacity in monopolistic competition?

Correct Answer
verified

Which of the following correctly lists the products in order from most advertised to least advertised?

Correct Answer
verified

Correct Answer
verified

A monopolistically competitive industry is characterized by

Correct Answer
verified

Correct Answer
verified

Exam 16: Monopolistic Competition

A monopolistically competitive market is like a monopoly in that

Correct AnswerverifiedShow Answer

A monopolistically competitive market

Correct AnswerverifiedShow Answer

In which of the following market structures do firms produce the welfare-maximizing level of output?

Correct AnswerverifiedShow Answer

Table 16-3 This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm. -Refer to Table 16-3.What price will this firm charge to maximize profit?

Correct AnswerverifiedShow Answer

In the short run,a firm in a monopolistically competitive market operates much like a

Correct AnswerverifiedShow Answer

Because a monopolistically competitive firm has some market power,in the long-run the price of its product exceeds its

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm raises its price,

Correct AnswerverifiedShow Answer

A firm is a price taker

Correct AnswerverifiedShow Answer

The higher the concentration ratio,the

Correct AnswerverifiedShow 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

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Correct AnswerverifiedShow Answer

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Correct AnswerverifiedMonopolistically competitive f...View AnswerShow Answer

The product-variety externality is associated with the

Correct AnswerverifiedShow Answer

Monopolistic competition is considered by some to be inefficient because

Correct AnswerverifiedShow Answer

A monopolistically competitive firm

Correct AnswerverifiedShow Answer

Which of the following best describes the idea of excess capacity in monopolistic competition?

Correct AnswerverifiedShow Answer

Which of the following correctly lists the products in order from most advertised to least advertised?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A monopolistically competitive industry is characterized by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Brand-name hotels are a critic...
View Answer

Correct Answer
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Correct Answer
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Monopolistically competitive f...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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