Question 1

Answer the question on the basis of the following demand and cost data for a specific firm.  If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing price will be

Accepted Answer

A)  $7.
B)  $9.
C)  $11.
D)  $6.

Question 2

Answer the question on the basis of the following demand and cost data for a specific firm.  If columns (1) and (3) of the demand data shown are this firm's demand schedule, economic profit will be

Accepted Answer

A)  $6.
B)  $8.
C)  $19.
D)  $10.

Question 3

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be

Accepted Answer

A)  100.
B)  160.
C)  180.
D)  210.

Question 4

Answer the question on the basis of the following demand and cost data for a specific firm.  If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing price will be

Accepted Answer

A)  $10.00.
B)  $9.60.
C)  $9.10.
D)  $10.50.

Question 5

If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will shift

Accepted Answer

A)  right and become more elastic.
B)  left and become less elastic.
C)  left and become more elastic.
D)  right and become less elastic.

Question 6

In which of the following market models do demand and marginal revenue diverge?

Accepted Answer

A)  pure monopoly, oligopoly, and monopolistic competition
B)  pure monopoly, oligopoly, and pure competition
C)  pure monopoly only
D)  oligopoly only

Question 7

Other things equal, if more firms enter a monopolistically competitive industry,

Accepted Answer

A)  the demand curves facing existing firms would shift to the right.
B)  the demand curves facing existing firms would shift to the left.
C)  the demand curves facing existing firms would become less elastic.
D)  losses would necessarily occur.

Question 8

Which of the following statements is most accurate about the difference between goods produced under the old central planning model of the Soviet Union versus those produced by American capitalism?

Accepted Answer

A)  Soviet markets were purely competitive, while U.S. markets were more monopolistically competitive.
B)  Soviet production employed mass production techniques, while American capitalism did not.
C)  Soviet production put greater emphasis on efficiency, while American capitalism allowed for much more product differentiation.
D)  Product differentiation in the Soviet Union was carefully integrated into the central plan, while differentiation in American capitalism occurs haphazardly and with little forethought.

Question 9

Refer to the diagram for a monopolistically competitive producer. The firm is

Accepted Answer

A)  minimizing losses in the long run.
B)  minimizing losses in the short run.
C)  realizing a normal profit in the long run.
D)  about to leave the industry.

Question 10

For a monopolistically competitive firm in long-run equilibrium,

Accepted Answer

A)  price will equal marginal cost.
B)  price will equal average total cost.
C)  marginal revenue will exceed marginal cost.
D)  price will equal the minimum average total cost.

Question 11

Answer the question based on the demand and cost schedules for a monopolistically competitive firm given in the table below.  What output quantity will the monopolistically competitive firm produce to maximize profits?

Accepted Answer

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

Question 12

In monopolistic competition there is an underallocation of resources at the profit-maximizing level of output, which means that

Accepted Answer

A)  ATC is not equal to MC.
B)  price is greater than MR.
C)  price is greater than minimum ATC.
D)  price is greater than MC.

Question 13

Which characteristics of monopolistic competition provide the monopoly aspects, and which provide the competitive aspects?

Accepted Answer

The characteristics of many firms and re...

Question 14

The variety of products and features that consumers may choose from in monopolistically competitive industries

Accepted Answer

A)  at least partially offsets the economic inefficiencies of this market structure.
B)  leads to an optimal allocation of resources in the market structure.
C)  guarantees that firms produce at full-capacity output levels.
D)  makes the demand curves facing firms in these industries perfectly elastic.

Question 15

"Variety is the spice of life" is best applied to which market structure?

Accepted Answer

A)  pure competition
B)  monopolistic competition
C)  oligopoly
D)  monopoly

Question 16

Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion.  If the firm sells 3 units of output, marginal revenue will be

Accepted Answer

A)  $−5.
B)  $35.
C)  $135.
D)  $165.

Question 17

The Herfindahl index

Accepted Answer

A)  tells us the degree to which monopolistically competitive firms are differentiating their products.
B)  is another name for the four-firm concentration ratio.
C)  tells us whether oligopolistic firms are engaging in collusion.
D)  gives much greater weight to larger firms than to smaller firms in an industry.

Question 18

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

Accepted Answer

A)  reduce product price.
B)  increase the level of output.
C)  decrease the level of output.
D)  not change the level of output.

Question 19

Refer to the above graph of the representative firm in monopolistic competition. Marginal revenue and marginal cost intersect at point

Accepted Answer

A)  a.
B)  b.
C)  c.
D)  d.

Question 20

Product variety in monopolistic competition comes at the cost of

Accepted Answer

A)  nonprice competition.
B)  barriers to entry.
C)  diminishing returns.
D)  excess capacity.

Exam 13: Monopolistic Competition

Refer to the diagram for a monopolistically competitive producer. The firm is

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For a monopolistically competitive firm in long-run equilibrium,

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Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be

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The variety of products and features that consumers may choose from in monopolistically competitive industries

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Answer the question on the basis of the following demand and cost data for a specific firm. If columns (1) and (3) of the demand data shown are this firm's demand schedule, economic profit will be

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Product variety in monopolistic competition comes at the cost of

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Which of the following statements is most accurate about the difference between goods produced under the old central planning model of the Soviet Union versus those produced by American capitalism?

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Which characteristics of monopolistic competition provide the monopoly aspects, and which provide the competitive aspects?

Correct AnswerverifiedThe characteristics of many firms and re...View AnswerShow Answer

Answer the question on the basis of the following demand and cost data for a specific firm. If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing price will be

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"Variety is the spice of life" is best applied to which market structure?

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In which of the following market models do demand and marginal revenue diverge?

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Other things equal, if more firms enter a monopolistically competitive industry,

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Answer the question on the basis of the following demand and cost data for a specific firm. If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing price will be

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Refer to the above graph of the representative firm in monopolistic competition. Marginal revenue and marginal cost intersect at point

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If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will shift

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Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. If the firm sells 3 units of output, marginal revenue will be

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Answer the question based on the demand and cost schedules for a monopolistically competitive firm given in the table below. What output quantity will the monopolistically competitive firm produce to maximize profits?

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The Herfindahl index

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A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

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In monopolistic competition there is an underallocation of resources at the profit-maximizing level of output, which means that

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The characteristics of many firms and re...
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