FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Monopolistic Competition.

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 181

Multiple Choice

Review LaterAdd Note

Review Later

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

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.

Correct Answer

verified

Show Answer

Question 182

Multiple Choice

Review LaterAdd Note

Review Later

Economists John Kenneth Galbraith and Friedrich Hayek disagreed about the roles of advertising and government.Which of the following is correct?

A) Galbraith thought advertising artificially enhanced consumers' desires for private goods, while Hayek thought no producer could "determine" consumers' tastes though advertising.
B) Galbraith believed in enhancing personal freedoms, while Hayek advocated larger government.
C) Galbraith thought advertising was a waste of resources because it did not influence consumers, while Hayek thought advertising was powerful enough to "determine" consumers' tastes.
D) Galbraith believed that the government should not interfere in markets, while Hayek believed that there was insufficient government regulation of marketing.

Correct Answer

verified

Show Answer

Question 183

Multiple Choice

Review LaterAdd Note

According to the signaling theory of advertising,consumers

Table 16-6 Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling. -Refer to Table 16-6.Suppose the government forced Traci's to produce at the efficient scale of output.Who would be better off as a result of this policy? Who would be worse off as a result of this policy?

Figure 16-6 -Refer to Figure 16-6.If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d) ,it would

To maximize its profit,a monopolistically competitive firm chooses its level of output by looking for the level of output at which

When advertising is used to relay information about price,each firm is able to enhance market power.

In the short run,a firm in a monopolistically competitive market operates much like a

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: If the government forces this firm to produce at its efficient scale,it will

Scenario 16-4 Consider the problem facing two firms, Burger Prince and McDaniel's, in the fast-food restaurant market. Each firm has just come up with an idea for a new fast-food menu item which it would sell for $5. Assume that the marginal cost for each new menu item is a constant $3, and the only fixed cost is for advertising. Each company knows that if it spends $16 million on advertising it will get 2 million consumers to try its new product. Burger Prince has done market research which suggests that its product does not have any "staying" power in the market. Even though it could get 2 million consumers to buy the product once, it is unlikely that they will continue to buy the product in the future. McDaniel's's market research suggests that its product is very good, and consumers who try the product will continue to be consumers over the ensuing year. On the basis of its market research, McDaniel's estimates that its initial 2 million customers will buy one unit of the product each month in the coming year, for a total of 32 million units. -Refer to Scenario 16-4.By its willingness to spend money on advertising,McDaniel's

Assume the role of a defender of advertising.Describe the characteristics of advertising that enhance the effectiveness of markets and increase the social welfare of society.

In a monopolistically competitive market,social welfare would be enhanced if

Figure 16-1. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.Suppose ATC = $18 when Q = 12.Then the

Monopolistic competition is an

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.How much profit will the monopolistically competitive firm earn in this situation?

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.Which industry is the least competitive?

The "competition" in monopolistically competitive markets is most likely a result of having many sellers in the market.

The typical firm in the US economy

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Monopolistic competition is characterized by a few sellers offering similar products,whereas oligopoly is characterized by many sellers offering differentiated products.