A) In the long run,both perfectly competitive firms and monopolistically competitive firms operate with excess capacity.
B) A firm operates with excess capacity when,in the long run,its level of output is below the efficient scale.
C) For any firm,efficient scale is the level of output at which the average-total-cost curve is tangent to the demand curve.
D) All of the above are correct.
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A) both market structures feature easy entry by new firms in the long run.
B) the main objective of firms in both market structures is something other than profit maximization.
C) firms in both market structures produce the welfare-maximizing level of output.
D) firms in both market structures set price above marginal cost.
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A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
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A) there are large fixed costs in the market.
B) there are no barriers to entry in the market.
C) the business-stealing externality is present in the market.
D) the government does not impose regulations on the market.
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A) the short run but not in the long run.
B) the long run but not in the short run.
C) both the short run and the long run.
D) neither the short run nor the long run.
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A) firm is in a long-run equilibrium when it produces 12 units of output.
B) firm is in a long-run equilibrium when it produces 16 units of output.
C) best the firm can do is sustain a loss of $24.
D) best the firm can do is earn a profit of $48.
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A) consumers are always willing to pay more for brand names.
B) brand names cause consumers to perceive differences that do not really exist.
C) consumers with the lowest levels of income are the most likely to be influenced by brand name advertising.
D) brand names are a form of socially efficient advertising.
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A) consumers are not confused by conflicting signals.
B) firms are generally less profitable.
C) markets are less efficient.
D) consumers make better choices.
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A) the market for those products is perfectly competitive.
B) it costs firms very little to produce those products.
C) those products are highly differentiated.
D) firms are irrational in their decisions to advertise.
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A) 100 units of output,and its profit will be negative.
B) 100 units of output,and its profit will be zero.
C) 133.33 units of output,and its profit will be negative.
D) 133.33 units of output,and its profit will be zero.
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A) marginal revenue is equal to marginal cost.
B) price is equal to average total cost.
C) demand is equal to average total cost.
D) All of the above are correct.
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A) 100 units of output.
B) between 100 and 133.33 units of output.
C) 133.33 units of output.
D) 154.92 units of output.
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A) Firms will exit this industry.
B) Firms will enter this industry.
C) This firm will continue to earn positive economic profits.
D) This firm will incur losses.
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A) an externality that is likely to be punished under antitrust laws.
B) the negative externality that occurs when one firm attempts to duplicate exactly the product of a different firm.
C) an externality that is considered to be an explicit cost of business in monopolistically competitive markets.
D) the negative externality associated with entry of new firms in a monopolistically competitive market.
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A) 36%
B) 51%
C) 62%
D) 67%
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A) Firms in monopolistic competition and monopoly can earn economic profits in both the short run and the long run.
B) Both perfectly competitive and monopolistically competitive firms are price takers.
C) Both a monopolistically competitive industry and a monopoly are characterized by a very small number of (or one) firm(s) .
D) Firms can easily enter a perfectly competitive or monopolistically competitive industry.
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A) earning zero economic profit.
B) likely to exit the market in the long run.
C) producing its efficient scale of output.
D) not maximizing its profit.
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