Question 1

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Accepted Answer

A)   industrial products.
B)   homogeneous products.
C)   consumer goods for which there are no close substitutes.
D)   highly-differentiated consumer goods.

Question 2

Which of the following correctly lists the products in order from most advertised to least advertised?

Accepted Answer

A)   soft drinks,breakfast cereals,dog food
B)   corn,dog food,communication satellites
C)   dog food,communication satellites,corn
D)   wheat,corn,crude oil

Question 3

A monopolistically competitive firm is currently producing 10 units of output.At this level of output the firm is charging a price equal to $10,has marginal revenue equal to $6,has marginal cost equal to $6,and has average total cost equal to $12.From this information we can infer that

Accepted Answer

A)   the firm is currently maximizing its profit.
B)   the profits of the firm are negative.
C)   firms are likely to leave this market in the long run.
D)   All of the above are correct.

Question 4

Critics of advertising argue that advertising

Accepted Answer

A)   creates desires that otherwise might not exist.
B)   enhances competition.
C)   benefits television viewers who enjoy tv commercials.
D)   All of the above are correct.

Question 5

A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Accepted Answer

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

Question 6

Figure 16-1.The figure is drawn for a monopolistically competitive firm. 
-Refer to Figure 16-1.Suppose that average total cost is $18 when Q=12.What is the profit-maximizing price and resulting profit?

Accepted Answer

A)   P=$12,profit=$0
B)   P=$18,profit=$72
C)   P=$18,profit=$24
D)   P=$18,profit=$0

Question 7

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 D?

Accepted Answer

A)   about 13%
B)   about 35%
C)   about 45%
D)   about 63%

Question 8

New firms will likely enter a monopolistically competitive market when price exceeds

Accepted Answer

A)   marginal revenue.
B)   average revenue.
C)   marginal cost.
D)   average total cost.

Question 9

Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because

Accepted Answer

A)   there are many other sellers in the market.
B)   there are very few other sellers in the market.
C)   the firm's product is different from those offered by other firms in the market.
D)   the firm faces the threat of entry into the market by new firms.

Question 10

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10.
 
-Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,how many units should the firm produce to maximize profit?

Accepted Answer

A)   3 units
B)   4 units
C)   5 units
D)   6 units

Question 11

Monopolistically competitive firms could reduce the average total cost of producing by increasing output;therefore,these firms have

Accepted Answer

The answer of Monopolistically competitive firms could reduce the average...

Question 12

Firms that spend a large amount of money on advertising a particular product are likely to be providing consumers with

Accepted Answer

A)   information about the availability of the product.
B)   information about product price.
C)   a signal of product quality.
D)   a good example of wasted resources.

Question 13

Advertisements that appear to convey no information at all

Accepted Answer

A)   are usually associated with "infomercials."
B)   are useless to consumers but valuable to firms.
C)   are useless to firms but valuable to consumers for their entertainment quality alone.
D)   may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise.

Question 14

Oligopoly is characterized by a few sellers offering similar products,whereas monopolistic competition is characterized by many sellers offering differentiated products.

Accepted Answer

A) True 
 B)False

Question 15

A concentration ratio

Accepted Answer

A)   measures the percentage of total output supplied by the four largest firms in the industry.
B)   reflects the level of competition in an industry.
C)   is related to the control that each firm has over price.
D)   All of the above are correct.

Question 16

Figure 16-2 
-Refer to Scenario 16-2.As a result of the new Ike's Ice Cream parlor,existing ice cream shops located in Mayville are likely to experience a

Accepted Answer

A)   business-stealing externality,which harms producers.
B)   business-stealing externality,which benefits producers.
C)   product-variety externality,which harms consumers.
D)   product-variety externality,which benefits consumers.

Question 17

Which two curves are tangent to each other in a monopolistically competitive market with zero economic profit?

Accepted Answer

A)   demand and average variable cost
B)   demand and average total cost
C)   marginal revenue and average variable cost
D)   marginal revenue and average total cost

Question 18

Figure 16-3 
-Refer to Figure 16-3.At the profit-maximizing,or loss-minimizing,output level,the firm in this figure has total costs of approximately

Accepted Answer

A)   $600.
B)   $6,000.
C)   $9,000.
D)   $12,500.

Question 19

Firms that sell highly differentiated consumer goods,such as over-the-counter drugs,soft drinks,breakfast cereals,and dog food,typically spend between 10 and 20 percent of revenue for

Accepted Answer

The answer of Firms that sell highly differentiated consumer goods,such...

Question 20

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1.Which industry has the highest concentration ratio?

Accepted Answer

A)   Industry W
B)   Industry X
C)   Industry Y
D)   Industry Z

Exam 16: Monopolistic Competition

Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10. -Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,how many units should the firm produce to maximize profit?

Correct AnswerverifiedShow Answer

Firms that sell highly differentiated consumer goods,such as over-the-counter drugs,soft drinks,breakfast cereals,and dog food,typically spend between 10 and 20 percent of revenue for

Correct AnswerverifiedShow Answer

Figure 16-1.The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.Suppose that average total cost is $18 when Q=12.What is the profit-maximizing price and resulting profit?

Correct AnswerverifiedShow Answer

Figure 16-2 -Refer to Scenario 16-2.As a result of the new Ike's Ice Cream parlor,existing ice cream shops located in Mayville are likely to experience a

Correct AnswerverifiedShow Answer

A firm maximizes its profit by producing output up to the point where marginal revenue equals marginal cost

Correct AnswerverifiedShow Answer

A monopolistically competitive firm is currently producing 10 units of output.At this level of output the firm is charging a price equal to $10,has marginal revenue equal to $6,has marginal cost equal to $6,and has average total cost equal to $12.From this information we can infer that

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because

Correct AnswerverifiedShow Answer

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1.Which industry has the highest concentration ratio?

Correct AnswerverifiedShow Answer

Which two curves are tangent to each other in a monopolistically competitive market with zero economic profit?

Correct AnswerverifiedShow Answer

New firms will likely enter a monopolistically competitive market when price exceeds

Correct AnswerverifiedShow Answer

Monopolistically competitive firms could reduce the average total cost of producing by increasing output;therefore,these firms have

Correct AnswerverifiedShow Answer

Which of the following correctly lists the products in order from most advertised to least advertised?

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 D?

Correct AnswerverifiedShow Answer

Figure 16-3 -Refer to Figure 16-3.At the profit-maximizing,or loss-minimizing,output level,the firm in this figure has total costs of approximately

Correct AnswerverifiedShow Answer

A concentration ratio

Correct AnswerverifiedShow Answer

Oligopoly is characterized by a few sellers offering similar products,whereas monopolistic competition is characterized by many sellers offering differentiated products.

Correct AnswerverifiedShow Answer

Firms that spend a large amount of money on advertising a particular product are likely to be providing consumers with

Correct AnswerverifiedShow Answer

Advertisements that appear to convey no information at all

Correct AnswerverifiedShow Answer

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified