Question 1

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the

Accepted Answer

A)  substitution effect.
B)  income effect.
C)  price effect.
D)  output effect.E) All of the above
F) None of the above

Question 2

Figure 13-11
 
-Refer to Figure 13-11.The diagram depicts a firm

Accepted Answer

A)  in a constant-cost industry.
B)  in an increasing-cost industry.
C)  in long-run equilibrium.
D)  that is making short-run losses.E) B) and C)
F) C) and D)

Question 3

What is the profit-maximizing rule for a monopolistically competitive firm?

Accepted Answer

A)  to produce a quantity that maximizes market share
B)  to produce a quantity that maximizes total revenue
C)  to produce a quantity such that marginal revenue equals marginal cost
D)  to produce a quantity such that price equals marginal costE) B) and C)
F) A) and D)

Question 4

A monopolistically competitive market is described as one in which there are

Accepted Answer

A)  a few firms producing an identical product.
B)  a large number of firms selling similar, but not identical, products.
C)  a few firms producing differentiated products.
D)  one large firm and many small firms producing identical products.E) B) and D)
F) B) and C)

Question 5

For a profit-maximizing monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Accepted Answer

A) True 
 B)False

Question 6

The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

Accepted Answer

A)  marginal revenue equals marginal cost.
B)  average revenue exceeds marginal cost by the greatest amount.
C)  price equals marginal cost.
D)  average revenue equals average total cost.E) B) and D)
F) A) and C)

Question 7

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

Accepted Answer

A)  automobile producers
B)  supermarkets
C)  gas stations
D)  makers of women's clothingE) A) and C)
F) A) and D)

Question 8

Which of the following is a disadvantage of trademarking a firm's product?

Accepted Answer

A)  A trademark differentiates a firm's product.
B)  A trademark conveys information about the product to the public.
C)  A trademark may become so widely used to denote a particular type of product that the trademark may no longer be a legally protected brand name.
D)  A trademark does not affect demand for the firm's product.E) A) and D)
F) None of the above

Question 9

Which of the following statements is true about monopolistically competitive firms?

Accepted Answer

A)  Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.
B)  Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.
C)  Like perfectly competitive firms, monopolistically competitive firms maximize their profits by setting price equal to marginal cost.
D)  Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demand curves.E) C) and D)
F) A) and C)

Question 10

If a monopolistically competitive firm lowers its price and, as a result, its total revenue decreases then

Accepted Answer

A)  the output effect of the price change was less than the price effect.
B)  the output effect of the price change was greater than the price effect.
C)  the firm's demand curve must have decreased.
D)  the substitution effect of the price change was greater than the income effect.E) A) and B)
F) All of the above

Question 11

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Accepted Answer

A)  new rivals entering the market.
B)  a decrease in demand for its product.
C)  demand for the firm's product becomes more elastic.
D)  a decrease in the number of rival products.E) B) and D)
F) A) and D)

Question 12

Firms such as Taco Bell and Chipotle operate hundreds of restaurants nationwide while firms such as El Pollo Loco operates only in five states.How would you characterize these stores?

Accepted Answer

A)  Taco Bell and Chipotle are oligopolists while El Pollo Loco is a monopolistic competitor.
B)  Taco Bell and Chipotle are duopolists while El Pollo Loco is a monopolistic competitor.
C)  Taco Bell and Chipotle are duopolists while El Pollo Loco is an oligopolist.
D)  They are all monopolistic competitors.E) B) and C)
F) A) and D)

Question 13

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

Accepted Answer

A) True 
 B)False

Question 14

Monopolistically competitive firms have downward-sloping demand curves.In the long run, monopolistically competitive firms earn zero economic profits.These two characteristics imply that in the long run

Accepted Answer

A)  monopolistically competitive markets achieve productive efficiency.
B)  monopolistically competitive markets achieve allocative efficiency.
C)  monopolistically competitive firms earn economic profits.
D)  monopolistically competitive firms have excess capacity.E) A) and B)
F) A) and C)

Question 15

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

Accepted Answer

A)  the original firm is driven into bankruptcy.
B)  the firm's demand curve is perfectly elastic.
C)  the firm's demand curve is tangent to its average total cost curve.
D)  the firm exits the market.E) All of the above
F) A) and B)

Question 16

Figure 13-13
 
-Refer to Figure 13-13.Economies of scale are exhausted at which output level?

Accepted Answer

A)  Q₁ units
B)  Q₂ units
C)  Q₃ units
D)  more than Q₁ unitsE) None of the above
F) B) and C)

Question 17

If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic.

Accepted Answer

A) True 
 B)False

Question 18

A monopolistically competitive firm maximizes profit where

Accepted Answer

A)  price = marginal revenue.
B)  price > marginal cost.
C)  marginal revenue > average revenue.
D)  total revenue > marginal cost.E) A) and C)
F) All of the above

Question 19

Arturo runs a Taco Bell franchise.He is selling 250 Gordita Supremes per week at a price of $2.75.If he lowers the price to $2.70, he will sell 251 Gordita Supremes.What is the marginal revenue of the 251st Gordita Supreme? If selling the extra Gordita Supreme adds $0.20 to Arturo's costs, what will be the effect on his profit from selling 251 Gordita Supremes instead of 250?

Accepted Answer

The marginal revenue of the 251st Gordit...

Question 20

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

Accepted Answer

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

Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

Which of the following statements is true about monopolistically competitive firms?

Correct Answer
verified

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

Correct Answer
verified

If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic.

Correct Answer
verified

Firms such as Taco Bell and Chipotle operate hundreds of restaurants nationwide while firms such as El Pollo Loco operates only in five states.How would you characterize these stores?

Correct Answer
verified

A monopolistically competitive firm maximizes profit where

Correct Answer
verified

The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

Correct Answer
verified

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

Correct Answer
verified

For a profit-maximizing monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Correct Answer
verified

Which of the following is a disadvantage of trademarking a firm's product?

Correct Answer
verified

If a monopolistically competitive firm lowers its price and, as a result, its total revenue decreases then

Correct Answer
verified

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the

Correct Answer
verified

Correct Answer
verified
The marginal revenue of the 251st Gordit...
View Answer

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Correct Answer
verified

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

Correct Answer
verified

What is the profit-maximizing rule for a monopolistically competitive firm?

Correct Answer
verified

A monopolistically competitive market is described as one in which there are

Correct Answer
verified

Figure 13-13 -Refer to Figure 13-13.Economies of scale are exhausted at which output level?

Correct Answer
verified

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

Correct Answer
verified

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

Correct Answer
verified

Monopolistically competitive firms have downward-sloping demand curves.In the long run, monopolistically competitive firms earn zero economic profits.These two characteristics imply that in the long run

Correct Answer
verified

Exam 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

Which of the following statements is true about monopolistically competitive firms?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic.

Correct AnswerverifiedShow Answer

Firms such as Taco Bell and Chipotle operate hundreds of restaurants nationwide while firms such as El Pollo Loco operates only in five states.How would you characterize these stores?

Correct AnswerverifiedShow Answer

A monopolistically competitive firm maximizes profit where

Correct AnswerverifiedShow Answer

The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a profit-maximizing monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of trademarking a firm's product?

Correct AnswerverifiedShow Answer

If a monopolistically competitive firm lowers its price and, as a result, its total revenue decreases then

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe marginal revenue of the 251st Gordit...View AnswerShow Answer

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Correct AnswerverifiedShow Answer

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

Correct AnswerverifiedShow Answer

What is the profit-maximizing rule for a monopolistically competitive firm?

Correct AnswerverifiedShow Answer

A monopolistically competitive market is described as one in which there are

Correct AnswerverifiedShow Answer

Figure 13-13 -Refer to Figure 13-13.Economies of scale are exhausted at which output level?

Correct AnswerverifiedShow Answer

A monopolistically competitive firm can increase its profits beyond the long-run equilibrium break-even level by deliberately lowering its price to force some of its competitors out of the market.

Correct AnswerverifiedShow Answer

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until

Correct AnswerverifiedShow Answer

Monopolistically competitive firms have downward-sloping demand curves.In the long run, monopolistically competitive firms earn zero economic profits.These two characteristics imply that in the long run

Correct AnswerverifiedShow 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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The marginal revenue of the 251st Gordit...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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