Question 1

Describe the typical demand curve facing an individual firm in perfectly competitive,monopoly,and monopolistically competitive markets.Explain what the shape of each firm's demand curve indicates about the amount of market power each firm possesses.

Accepted Answer

The perfectly elastic demand curve facin...

Question 2

The competitive dimension of monopolistic competition is that

Accepted Answer

A)  High barriers to entry tend to push economic profits toward zero.
B)  Consumers view each firm's products as interchangeable.
C)  Low barriers to entry tend to push economic profits toward zero.
D)  Each firm in the industry will lose all of its customers if it raises its price.

Question 3

Product differentiation refers to

Accepted Answer

A)  Features that make one product appear different from competing products in the same market.
B)  Different prices for the same product in a certain market.
C)  The selling of identical products in different markets.
D)  The charging of different prices for the same product in different markets.

Question 4

An In the News article titled "Selling "Pure Water": A $Billion Scam?" refers to the use of advertising.Successful advertising can do all of the following except

Accepted Answer

A)  Differentiate products.
B)  Create brand loyalty.
C)  Decrease the price elasticity of demand for the product.
D)  Maximize efficiency.

Question 5

A distinguishing characteristic of monopolistic competition is that there are many firms in an industry.

Accepted Answer

A) True 
 B)False

Question 6

Entry into a market characterized by monopolistic competition

Accepted Answer

A)  Is rare because firms have market power.
B)  Is frequent because barriers to entry are low.
C)  Occurs when a firm's demand is everywhere below its long-run average cost curve.
D)  Results from economies of scale.

Question 7

Large cities typically have many drugstores that offer different levels of service and product selection.The drugstore market in big cities can best be classified as

Accepted Answer

A)  A competitive market.
B)  Monopolistic competition.
C)  Oligopoly.
D)  Monopoly.

Question 8

Demand and Cost Data for Will's Beach Ball Company Table 26.1
A Monopolistically Competitive Firm
  Demand Data  Price  Quantity  Cost Data Output  Total Cost $1166$48$1077$52$988$57$899$63$71010$70\begin{array}{|r|r|r|r|r|}\hline&	ext { Demand Data }&&\	ext { Price } & 	ext { Quantity } & 	ext { Cost Data Output } & 	ext { Total Cost } \\hline \$ 11 & 6 & 6 & \$ 48 \\hline \$ 10 & 7 & 7 & \$ 52 \\hline\$9&8&8&\$57\\hline \$ 8 & 9 & 9 & \$63 \\hline  \$7 & 10& 10&\$70 \\hline\end{array} Price $11$10$9$8$7​ Demand Data  Quantity 678910​ Cost Data Output 678910​ Total Cost $48$52$57$63$70​​ 
 Refer to Table 26.1.At the profit-maximizing output and price,Will's Beach Ball Company will earn a profit equal to

Accepted Answer

A)  $18.
B)  $70.
C)  $72.
D)  -$12.

Question 9

One In the News article is titled "The Cola Wars: It's Not All Taste." Firms in a monopolistically competitive industry,such as the soft drink market,are likely to

Accepted Answer

A)  Meet together to set prices.
B)  Behave exactly like a monopoly.
C)  Advertise to create brand loyalty.
D)  Attempt to reduce market power.

Question 10

One symptom of the inefficiencies associated with monopolistic competition is industry wide excess capacity.

Accepted Answer

A) True 
 B)False

Question 11

Price reductions are often used as an effective way to increase sales in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 12

Firms in a monopolistically competitive market will

Accepted Answer

A)  Produce efficiently.
B)  Make economic profits in the long run.
C)  Use the profit-maximizing rule MC = MR.
D)  Produce at the minimum of ATC.

Question 13

Which of the following characterizes the difference between oligopoly and monopolistic competition?

Accepted Answer

A)  Oligopolists are independent of each other;monopolistically competitive firms are interdependent.
B)  Monopolistically competitive firms experience zero long-run economic profit;oligopolists may experience positive long-run economic profit.
C)  There are many oligopolists but only a few monopolistically competitive firms.
D)  Monopolistically competitive firms face horizontal demand curves;oligopolists face downward-sloping demand curves.

Question 14

In the short run,a monopolistically competitive firm

Accepted Answer

A)  May make economic profits,but it fails to make economic profits in the long run because of the entry of new firms.
B)  May make profits just as it does in the long run because firms can enter easily.
C)  Produces at a rate at which long-run average cost equals price,but not at which long-run marginal cost equals marginal revenue.
D)  Makes profits just as it does in the long run because entry is blocked.

Question 15

Each producer in monopolistic competition has

Accepted Answer

A)  Complete market power.
B)  Substantial market power.
C)  Some market power.
D)  No market power.

Question 16

Discuss both the price elasticity of demand and the cross-price elasticity of demand conditions facing a firm in a monopolistically competitive industry.Include in your essay the role of advertising and the creation of brand loyalty.

Accepted Answer

Firms in monopolistic competition advert...

Question 17

A monopolistically competitive firm confronts a downward-sloping demand curve and as a result has some market power.

Accepted Answer

A) True 
 B)False

Question 18

One of the main differences between an oligopolistic firm and a monopolistically competitive firm is that a monopolistically competitive firm

Accepted Answer

A)  Faces a horizontal demand curve;an oligopoly does not.
B)  Is relatively independent;an oligopoly is interdependent.
C)  Has no market power;an oligopoly has some market power.
D)  Has high barriers to entry;an oligopoly does not.

Question 19

Cross-price elasticity is very low in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 20

When a monopolistically competitive firm advertises,it is attempting to increase

Accepted Answer

A)  The demand and decrease the price elasticity of demand for its product.
B)  The demand and increase the price elasticity of demand for its product.
C)  Long-run profits.
D)  Market demand.

Exam 26: Monopolistic Competition

One symptom of the inefficiencies associated with monopolistic competition is industry wide excess capacity.

Correct Answer
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Correct Answer
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Entry into a market characterized by monopolistic competition

Correct Answer
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One In the News article is titled "The Cola Wars: It's Not All Taste." Firms in a monopolistically competitive industry,such as the soft drink market,are likely to

Correct Answer
verified

Discuss both the price elasticity of demand and the cross-price elasticity of demand conditions facing a firm in a monopolistically competitive industry.Include in your essay the role of advertising and the creation of brand loyalty.

Correct Answer
verified
Firms in monopolistic competition advert...
View Answer

Firms in a monopolistically competitive market will

Correct Answer
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The competitive dimension of monopolistic competition is that

Correct Answer
verified

Large cities typically have many drugstores that offer different levels of service and product selection.The drugstore market in big cities can best be classified as

Correct Answer
verified

A distinguishing characteristic of monopolistic competition is that there are many firms in an industry.

Correct Answer
verified

Cross-price elasticity is very low in monopolistic competition.

Correct Answer
verified

A monopolistically competitive firm confronts a downward-sloping demand curve and as a result has some market power.

Correct Answer
verified

Describe the typical demand curve facing an individual firm in perfectly competitive,monopoly,and monopolistically competitive markets.Explain what the shape of each firm's demand curve indicates about the amount of market power each firm possesses.

Correct Answer
verified
The perfectly elastic demand curve facin...
View Answer

Product differentiation refers to

Correct Answer
verified

One of the main differences between an oligopolistic firm and a monopolistically competitive firm is that a monopolistically competitive firm

Correct Answer
verified

An In the News article titled "Selling "Pure Water": A $Billion Scam?" refers to the use of advertising.Successful advertising can do all of the following except

Correct Answer
verified

Price reductions are often used as an effective way to increase sales in monopolistic competition.

Correct Answer
verified

In the short run,a monopolistically competitive firm

Correct Answer
verified

When a monopolistically competitive firm advertises,it is attempting to increase

Correct Answer
verified

Which of the following characterizes the difference between oligopoly and monopolistic competition?

Correct Answer
verified

Each producer in monopolistic competition has

Correct Answer
verified

Exam 26: Monopolistic Competition

One symptom of the inefficiencies associated with monopolistic competition is industry wide excess capacity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Entry into a market characterized by monopolistic competition

Correct AnswerverifiedShow Answer

One In the News article is titled "The Cola Wars: It's Not All Taste." Firms in a monopolistically competitive industry,such as the soft drink market,are likely to

Correct AnswerverifiedShow Answer

Discuss both the price elasticity of demand and the cross-price elasticity of demand conditions facing a firm in a monopolistically competitive industry.Include in your essay the role of advertising and the creation of brand loyalty.

Correct AnswerverifiedFirms in monopolistic competition advert...View AnswerShow Answer

Firms in a monopolistically competitive market will

Correct AnswerverifiedShow Answer

The competitive dimension of monopolistic competition is that

Correct AnswerverifiedShow Answer

Large cities typically have many drugstores that offer different levels of service and product selection.The drugstore market in big cities can best be classified as

Correct AnswerverifiedShow Answer

A distinguishing characteristic of monopolistic competition is that there are many firms in an industry.

Correct AnswerverifiedShow Answer

Cross-price elasticity is very low in monopolistic competition.

Correct AnswerverifiedShow Answer

A monopolistically competitive firm confronts a downward-sloping demand curve and as a result has some market power.

Correct AnswerverifiedShow Answer

Describe the typical demand curve facing an individual firm in perfectly competitive,monopoly,and monopolistically competitive markets.Explain what the shape of each firm's demand curve indicates about the amount of market power each firm possesses.

Correct AnswerverifiedThe perfectly elastic demand curve facin...View AnswerShow Answer

Product differentiation refers to

Correct AnswerverifiedShow Answer

One of the main differences between an oligopolistic firm and a monopolistically competitive firm is that a monopolistically competitive firm

Correct AnswerverifiedShow Answer

An In the News article titled "Selling "Pure Water": A $Billion Scam?" refers to the use of advertising.Successful advertising can do all of the following except

Correct AnswerverifiedShow Answer

Price reductions are often used as an effective way to increase sales in monopolistic competition.

Correct AnswerverifiedShow Answer

In the short run,a monopolistically competitive firm

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm advertises,it is attempting to increase

Correct AnswerverifiedShow Answer

Which of the following characterizes the difference between oligopoly and monopolistic competition?

Correct AnswerverifiedShow Answer

Each producer in monopolistic competition has

Correct AnswerverifiedShow Answer

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Correct Answer
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Firms in monopolistic competition advert...
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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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The perfectly elastic demand curve facin...
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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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