Question 1

A firm charges a price that exceeds marginal cost

Accepted Answer

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

Question 2

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 3

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) C) and D)
F) All of the above

Question 4

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

Question 5

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. In response to the situation represented by the figure, we would expect

Accepted Answer

A)   some of the firms that are currently in the market to exit.
B)   the demand for this firm's product to increase, assuming this firm does not exit.
C)   this firm's profit to move from its current value toward zero.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 6

If advertising decreases the elasticity of demand for specific brand names of hard liquor, we would expect firms to be able to charge a larger markup over marginal cost.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 K?

Accepted Answer

A)   about 8%
B)   about 36%
C)   about 48%
D)   about 84%E) B) and C)
F) A) and B)

Question 9

Figure 16-12 
-Refer to Figure 16-12. What is the efficient scale of production?

Accepted Answer

A)   This firm cannot produce efficiently.
B)   12 units
C)   22 units
D)   28 unitsE) A) and C)
F) A) and B)

Question 10

A profit-maximizing firm in a monopolistically competitive market can earn positive, negative, or zero profits in the short run.

Accepted Answer

A) True 
 B)False

Question 11

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 12

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Accepted Answer

A)   more money is spent on Mucinex than on Grainger drill presses.
B)   the market for Mucinex is more highly differentiated than the market for Grainger drill presses.
C)   Grainger has lower costs of production than Mucinex.
D)   Mucinex operates in an oligopoly, while Grainger operates in a monopolistically competitive market.E) B) and C)
F) None of the above

Question 13

The market for wheat is most likely considered a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 14

Figure 16-3
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

Accepted Answer

A)   $200
B)   $312.50
C)   $4000
D)   $800E) C) and D)
F) B) and D)

Question 15

Firms that sell highly differentiated consumer goods, such as soft drinks, breakfast cereals, and dog food, typically spend what percent of their revenues on advertising?

Accepted Answer

A)   0-1
B)   2-4
C)  10-20
D)   over 50E) All of the above
F) B) and D)

Question 16

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. Which friend is a critic of brand names?

Accepted Answer

The answer of Scenario 16-9
Dean goes to the grocery store...

Question 17

How does advertising signal to consumers that the product is a good one?

Accepted Answer

A)   By seeing famous people using the product, consumers infer that they too can be famous.
B)   By being willing to spend money on advertising, firms let consumers know the product is likely a good one since firms would not likely advertise a poor product.
C)   By making consumers laugh during commercials, firms are associating positive experiences with the product.
D)   Without allowing consumers to actually use the product, it is not possible for firms to signal to consumers the product's quality.E) A) and B)
F) A) and D)

Question 18

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) C) and D)
F) B) and D)

Question 19

Figure 16-5 
-Refer to Figure 16-5. 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) All of the above
F) C) and D)

Question 20

Figure 16-14 
-Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Accepted Answer

The answer of Figure 16-14 
-Refer to Figure 16-14. Which...

Exam 16: Monopolistic Competition

A profit-maximizing firm in a monopolistically competitive market can earn positive, negative, or zero profits in the short run.

Correct Answer
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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 K?

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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If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Correct Answer
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How does advertising signal to consumers that the product is a good one?

Correct Answer
verified

Firms that sell highly differentiated consumer goods, such as soft drinks, breakfast cereals, and dog food, typically spend what percent of their revenues on advertising?

Correct Answer
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Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

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

Correct Answer
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Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. In response to the situation represented by the figure, we would expect

Correct Answer
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An oligopoly is a market in which

Correct Answer
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The market for wheat is most likely considered a monopolistically competitive market.

Correct Answer
verified

A firm charges a price that exceeds marginal cost

Correct Answer
verified

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 Answer
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Correct Answer
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the advertising conv...
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Figure 16-5 -Refer to Figure 16-5. Panel b is consistent with a firm in a monopolistically competitive market that is

Correct Answer
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Figure 16-12 -Refer to Figure 16-12. What is the efficient scale of production?

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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Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

Correct Answer
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If advertising decreases the elasticity of demand for specific brand names of hard liquor, we would expect firms to be able to charge a larger markup over marginal cost.

Correct Answer
verified

Exam 16: Monopolistic Competition

A profit-maximizing firm in a monopolistically competitive market can earn positive, negative, or zero profits in the short run.

Correct AnswerverifiedShow Answer

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 K?

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

If we observe a great deal more advertising for Mucinex, an over-the-counter drug, than for a Grainger drill press, we can infer that

Correct AnswerverifiedShow Answer

How does advertising signal to consumers that the product is a good one?

Correct AnswerverifiedShow Answer

Firms that sell highly differentiated consumer goods, such as soft drinks, breakfast cereals, and dog food, typically spend what percent of their revenues on advertising?

Correct AnswerverifiedShow Answer

Figure 16-3 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-3. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

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

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Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. In response to the situation represented by the figure, we would expect

Correct AnswerverifiedShow Answer

An oligopoly is a market in which

Correct AnswerverifiedShow Answer

The market for wheat is most likely considered a monopolistically competitive market.

Correct AnswerverifiedShow Answer

A firm charges a price that exceeds marginal cost

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

Correct Answerverifiedthe advertising conv...View AnswerShow Answer

Figure 16-5 -Refer to Figure 16-5. Panel b is consistent with a firm in a monopolistically competitive market that is

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Figure 16-12 -Refer to Figure 16-12. What is the efficient scale of production?

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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?

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Figure 16-14 -Refer to Figure 16-14. Which letter identifies the profit-maximizing level of output for this firm?

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If advertising decreases the elasticity of demand for specific brand names of hard liquor, we would expect firms to be able to charge a larger markup over marginal cost.

Correct AnswerverifiedShow Answer

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the advertising conv...
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