Question 1

An industry with a large number of firms,differentiated products,and free entry and exit is called

Accepted Answer

A)   perfect competition.
B)   monopolistic competition.
C)   oligopoly.
D)   monopoly.
E)   monopolistic oligopoly.F) A) and B)
G) A) and D)

Question 2

If the Herfindahl-Hirschman Index for an industry is 8,528,is the industry competitive or concentrated?

Accepted Answer

With a Herfindahl-Hirschman In...

Question 3

A firm in monopolistic competition is

Accepted Answer

A)   efficient because in the long run it makes zero economic profit.
B)   efficient because it produces at the minimum average total cost.
C)   inefficient because price exceeds marginal cost.
D)   efficient because of the ease of entry.
E)   efficient because it produces where MR = MC.F) C) and D)
G) D) and E)

Question 4

Advertising costs and other selling costs are

Accepted Answer

A)   efficient.
B)   fixed costs.
C)   variable costs.
D)   marginal costs.
E)   considered as part of demand because they affect the demand for the good.F) All of the above
G) C) and E)

Question 5

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.Kevin will train how many clients per day?

Accepted Answer

A)   4
B)   6
C)   10
D)   between 2 and 4
E)   None of the above answers is correct.F) A) and E)
G) C) and D)

Question 6

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Accepted Answer

A)   fixed cost
B)   average total cost
C)   average variable cost
D)   average fixed cost
E)   marginal costF) A) and D)
G) A) and C)

Question 7

When firms in monopolistic competition incur an economic loss,some firms will

Accepted Answer

A)   enter the industry and produce more products.
B)   exit the industry, and demand will increase for the firms that remain.
C)   exit the industry, and demand will decrease for the firms that remain.
D)   enter the industry, and demand will become more elastic for the original firms.
E)   exit the industry and other firms will enter.F) A) and B)
G) A) and C)

Question 8

-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

Accepted Answer

Industry A has a four-firm concentration...

Question 9

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

Accepted Answer

A)   100 percent
B)   75 percent
C)   25 percent
D)   0 percent
E)   91 percentF) A) and D)
G) A) and C)

Question 10

Monopolistic competition is efficient when compared to

Accepted Answer

A)   to perfect competition.
B)   complete product uniformity.
C)   the short run.
D)   the long run.
E)   None of the above answers is correct.F) D) and E)
G) A) and E)

Question 11

In monopolistic competition in the long run,firms ________.

Accepted Answer

A)   make zero economic profit and require more capacity
B)   incur an economic loss and require more capacity
C)   make an economic profit and have excess capacity
D)   make zero economic profit and have excess capacity
E)   make an economic profit and require more capacityF) B) and C)
G) A) and D)

Question 12

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

Accepted Answer

A)   a monopoly.
B)   monopolistic competition.
C)   an oligopoly.
D)   perfect competition.
E)   oligopolistic competition.F) B) and E)
G) C) and D)

Question 13

The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI) for this industry is ________.

Accepted Answer

A)   2,551
B)   5,184
C)   24,061
D)   10,000
E)   3,013F) A) and B)
G) C) and D)

Question 14

The U.S.Justice Department

Accepted Answer

A)   scrutinizes any merger of firms in a market in which the four-firm concentration exceeds 25 percent.
B)   uses only the Herfindahl-Hirschman Index when considering whether to challenge a merger.
C)   is likely to challenge a merger if the Herfindahl-Hirschman Index exceeds 1800.
D)   Answers A and B are correct.
E)   Answers B and C are correct.F) All of the above
G) A) and E)

Question 15

In monopolistic competition,there are ________ barriers to entry and so firms in monopolistic competition ________ make an economic profit in the long run.

Accepted Answer

A)   high; can
B)   high; cannot
C)   no; can
D)   no; cannot
E)   sometimes; can sometimesF) D) and E)
G) All of the above

Question 16

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

Accepted Answer

A)   can; can
B)   can; cannot
C)   cannot; can
D)   cannot; cannot
E)   can; only in the short run canF) D) and E)
G) B) and C)

Question 17

One problem with measures of market concentrations is that they do not

Accepted Answer

A)   account for barriers to entry.
B)   allow for all market types.
C)   account for the difficulty in collecting total revenue data.
D)   create meaningful comparisons across industries.
E)   accurately measure concentration in markets with fewer than 4 firms.F) None of the above
G) All of the above

Question 18

The figure above shows a firm's demand and marginal revenue curves and its cost curves.
-The darkened area in the figure above is the

Accepted Answer

A)   deadweight loss.
B)   firm's economic loss.
C)   consumer surplus.
D)   firm's total cost.
E)   firm's total revenue.F) A) and B)
G) C) and D)

Question 19

Advertising costs

Accepted Answer

A)   make the marginal revenue more elastic.
B)   shift the ATC curve upward.
C)   shift the marginal cost curve rightward.
D)   indirectly shift the marginal cost curve upward.
E)   affect the marginal cost but not the total cost.F) A) and B)
G) A) and C)

Question 20

In monopolistic competition there

Accepted Answer

A)   are many firms and many buyers.
B)   are several large firms.
C)   is one large firm.
D)   might be many, several, or one firm.
E)   are many firms but only a few buyers.F) B) and C)
G) A) and C)

Exam 17: Monopolistic Competition

For a firm in monopolistic competition,the efficient scale is the amount of output at which ________ is a minimum.

Correct AnswerverifiedShow Answer

An industry with a large number of firms,differentiated products,and free entry and exit is called

Correct AnswerverifiedShow Answer

A firm in monopolistic competition is

Correct AnswerverifiedShow Answer

In monopolistic competition,there are ________ barriers to entry and so firms in monopolistic competition ________ make an economic profit in the long run.

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The three largest firms in an industry have market shares of 40 percent,30 percent,and 2 percent.The remaining 47 firms in the industry each have a market share of 1 percent.The Herfindahl-Hirschman Index (HHI) for this industry is ________.

Correct AnswerverifiedShow Answer

When firms in monopolistic competition incur an economic loss,some firms will

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-Listed in the above table are the total revenues for the firms in two different industries.Each industry has only eleven firms.Find the four-firm concentration ratio and the Herfindahl-Hirschman Index for each industry.

Correct AnswerverifiedIndustry A has a four-firm concentration...View AnswerShow Answer

In monopolistic competition there

Correct AnswerverifiedShow Answer

The figure above shows a firm's demand and marginal revenue curves and its cost curves. -The darkened area in the figure above is the

Correct AnswerverifiedShow Answer

If the four-firm concentration ratio for the market for pizza is 28 percent,then this industry is best characterized as

Correct AnswerverifiedShow Answer

Which of the following four-firm concentration ratios is consistent with monopolistic competition?

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Advertising costs

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One problem with measures of market concentrations is that they do not

Correct AnswerverifiedShow Answer

If the Herfindahl-Hirschman Index for an industry is 8,528,is the industry competitive or concentrated?

Correct AnswerverifiedWith a Herfindahl-Hirschman In...View AnswerShow Answer

In monopolistic competition in the long run,firms ________.

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The U.S.Justice Department

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Advertising costs and other selling costs are

Correct AnswerverifiedShow Answer

-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.Kevin will train how many clients per day?

Correct AnswerverifiedShow Answer

A firm in monopolistic competition ________ influence its price and ________ influence the market average price.

Correct AnswerverifiedShow Answer

Monopolistic competition is efficient when compared to

Correct AnswerverifiedShow Answer

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In monopolistic competition,there are barriers to entry and so firms in monopolistic competition make an economic profit in the long run.

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Industry A has a four-firm concentration...
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With a Herfindahl-Hirschman In...
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A firm in monopolistic competition influence its price and influence the market average price.

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