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Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that


A) firms produce at the minimum point of their average cost curves.
B) price equals marginal cost.
C) firms earn normal profits.
D) price equals marginal revenue.

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

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Which of the following is true for a monopolistically competitive firm in long-run equilibrium?


A) P = ATC and MR = MC.
B) P = ATC and P = MC.
C) P > ATC and P > MR.
D) P > MR and MC = ATC.

E) B) and D)
F) None of the above

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If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?


A) Demand decreases and becomes less elastic.
B) Demand decreases and becomes more elastic.
C) Demand increases and becomes less elastic.
D) Demand increases and becomes more elastic.

E) A) and D)
F) None of the above

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Only one of the following statements is correct. The statements compare perfectly competitive (PC) markets and monopolistically competitive (MC) markets. Which statement is correct?


A) Productive efficiency is achieved in both PC and MC markets. Allocative efficiency is achieved only in MC markets.
B) Allocative efficiency is achieved in both PC and MC markets. Productive efficiency is achieved only in PC markets.
C) Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets.
D) Allocative efficiency is achieved only in PC markets. Productive efficiency is achieved only in MC markets.

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

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Which of the following is not a characteristic of monopolistic competition?


A) There are many buyers and sellers.
B) There are low barriers to entry.
C) Average revenue is equal to price.
D) The products sold by all firms are identical.

E) A) and B)
F) B) and D)

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Figure 13-17 Figure 13-17 -Refer to Figure 13-17. What is the amount of excess capacity? A) Q<sub>h</sub> - Q<sub>f</sub> units B) Q<sub>j</sub> - Q<sub>f</sub> units C) Q<sub>j</sub> - Q<sub>h</sub> units D) Q<sub>h</sub> - Q<sub>g</sub> units -Refer to Figure 13-17. What is the amount of excess capacity?


A) Qh - Qf units
B) Qj - Qf units
C) Qj - Qh units
D) Qh - Qg units

E) C) and D)
F) A) and B)

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Figure 13-4 Figure 13-4 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4. What is the area that represents the total revenue made by the firm? A) 0P<sub>0</sub>aQ<sub>a</sub> B) 0P<sub>1</sub>bQ<sub>a</sub> C) 0P<sub>2</sub>cQ<sub>a</sub> D) 0P<sub>3</sub>dQ<sub>a</sub> Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4. What is the area that represents the total revenue made by the firm?


A) 0P0aQa
B) 0P1bQa
C) 0P2cQa
D) 0P3dQa

E) None of the above
F) A) and D)

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Explain the significance of brand management to a firm that has differentiated its product. Comment specifically on the importance of obtaining a trademark.

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The owner or manager of a firm that has ...

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Which of the following is not an example of a monopolistically competitive market?


A) automobile producers
B) supermarkets
C) gas stations
D) makers of women's clothing

E) B) and D)
F) A) and B)

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In San Francisco there are many restaurants that specialize in a wide variety of cuisines. Patronage at these restaurants is influenced by factors such as tastes, price, and location. This market is


A) perfectly competitive.
B) monopolistically competitive.
C) oligopolistic.
D) monopolistic.

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

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Firms use two marketing tools to differentiate their products. What are these two tools?


A) lobbying and word of mouth
B) market research and demand estimation
C) brand management and advertising
D) consumer surveys and market experiments

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

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Figure 13-19 Figure 13-19 -Refer to Figure 13-19 to answer the following questions. a. What is the productively efficient output? b. What is the allocatively efficient output? c. What is the amount of excess capacity? d. Suppose the firm is currently producing 14 units. What happens if it increases output to 17 units? -Refer to Figure 13-19 to answer the following questions. a. What is the productively efficient output? b. What is the allocatively efficient output? c. What is the amount of excess capacity? d. Suppose the firm is currently producing 14 units. What happens if it increases output to 17 units?

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a. The productively efficient output is ...

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A major difference between monopolistic competition and perfect competition is


A) the number of sellers in the markets.
B) the degree by which the market demand curves slope downwards.
C) that products are not standardized in monopolistic competition unlike in perfect competition.
D) the barriers to entry in the two markets.

E) A) and B)
F) A) and D)

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Consumers benefit from monopolistic competition by


A) being able to choose from products more closely suited to their tastes.
B) paying the lowest possible price for the product.
C) paying the same price as everyone else.
D) being able to purchase high-quality products at low prices.

E) C) and D)
F) A) and D)

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How does the long-run equilibrium of a monopolistically competitive industry differ from that of a perfectly competitive industry?


A) A firm in monopolistic competition will earn economic profits but a firm in perfect competition earns zero profit.
B) A firm in monopolistic competition will charge a price higher than the average cost of production but a firm in perfect competition charges a price equal to the average cost of production.
C) A firm in monopolistic competition does not take full advantage of its economies of scale but a firm in perfect competition produces at the lowest average cost possible.
D) A firm in monopolistic competition produces an allocatively efficient output level while a firm in perfect competition produces a productively efficient output level.

E) A) and D)
F) A) and C)

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Being the first to sell a particular good can give a firm advantages over other firms that sell similar products. What is the name given to these advantages?


A) first-mover
B) first come, first served
C) follow the leader
D) first to market

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

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When new firms are encouraged to enter a monopolistically competitive market


A) some existing firms must be earning economic profits.
B) they do so because there is insufficient product differentiation.
C) the demand curve facing an existing firm shifts to the right.
D) the marginal cost curve facing an existing firm shifts downwards.

E) A) and D)
F) B) and D)

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Table 13-4 Table 13-4 Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories. -Refer to Table 13-4. Victoria's profit-maximizing quantity (Q) and price (P) are A) Q = 3; P = $7. B) Q = 4; P = $6. C) Q = 5; P = $5. D) Q = 6; P = $4. Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories. -Refer to Table 13-4. Victoria's profit-maximizing quantity (Q) and price (P) are


A) Q = 3; P = $7.
B) Q = 4; P = $6.
C) Q = 5; P = $5.
D) Q = 6; P = $4.

E) B) and C)
F) All of the above

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Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?


A) The firm's demand curve will shift to the right if it stays in business in the long run.
B) The firm will exit the industry if it continues to suffer economic losses.
C) The firm will break even if its stays in business in the long run.
D) In the long run, the firm will be able to charge a price that is greater than its average total cost.

E) B) and D)
F) A) and C)

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If a significant number of consumers switch from ordering food delivery from traditional restaurants to ordering from "ghost restaurants", a "ghost restaurant" will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.


A) right; right
B) right; left
C) left; right
D) left; left

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

Correct Answer

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