Question 1

Is a monopolistically competitive firm productively efficient?

Accepted Answer

A)  No, because it does not produce at minimum average total cost.
B)  Yes, because it produces where marginal cost equals marginal revenue.
C)  No, because price is greater than marginal cost.
D)  Yes, because price equals average total cost.E) A) and D)
F) A) and C) A

Question 2

A monopolistically competitive market is described as one in which there are

Accepted Answer

A)  a few firms producing an identical product.
B)  a large number of firms selling similar, but not identical, products.
C)  a few firms producing differentiated products.
D)  one large firm and many small firms producing identical products.E) C) and D)
F) B) and D)

Question 3

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Accepted Answer

A)  Demand decreases and becomes less elastic.
B)  Demand decreases and becomes more elastic.
C)  Demand increases and becomes less elastic.
D)  Demand increases and becomes more elastic.E) None of the above
F) All of the above

Question 4

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

Accepted Answer

A)  firms produce at the minimum point of their average cost curves.
B)  price equals marginal cost.
C)  firms earn normal profits.
D)  price equals marginal revenue.E) C) and D)
F) None of the above

Question 5

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Accepted Answer

A)  $326.
B)  $40.
C)  $6.52.
D)  impossible to determine without additional information.E) All of the above
F) A) and C)

Question 6

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Accepted Answer

A)  Price, average revenue, and marginal revenue are all equal.
B)  Price, average revenue, and marginal revenue are all different.
C)  Price equals average revenue but is greater than marginal revenue.
D)  Price equals average revenue but is less than marginal revenue.E) None of the above
F) All of the above

Question 7

The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair.It sells 8 pairs of jeans per day at a price of $90 per pair.The marginal revenue of the eighth pair of jeans is

Accepted Answer

A)  $20.
B)  $90.
C)  $100.
D)  $700.E) A) and B)
F) All of the above

Question 8

Figure 13-17
 
-Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Accepted Answer

A)  Its average cost of production will fall and its profit will rise.
B)  It will be taking advantage of economies of scale and will be able to lower the price of its product.
C)  It will move from a zero profit situation to a profit situation.
D)  It will move from a zero profit situation to a loss situation.E) B) and D)
F) A) and D)

Question 9

Figure 13-8
  
Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 13-8.At the profit-maximizing output level the firm will

Accepted Answer

A)  earn a profit of $176.
B)  break even.
C)  earn a profit of $88.
D)  earn a profit of $60.E) A) and B)
F) C) and D)

Question 10

In a monopolistically competitive market, a successful new restaurant

Accepted Answer

A)  can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants.
B)  will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product.
C)  will face high entry barriers because of health and safety regulations to which all restaurants are subject.
D)  must obtain a trademark to ensure that it will break even in the long run.E) C) and D)
F) A) and B) B

Question 11

Article Summary
In Colorado, recreational marijuana is legal but smoking in hotels is not. Former Wall Street lawyer Joel Schneider found a way around this legal conundrum by opening a bed-and-breakfast (B&B) , which he refers to as Bud+Breakfast. In Colorado, B&Bs are considered private property and therefore not subject to the no-smoking laws, and Schneider does not allow guests under the age of 21, the legal age to buy marijuana in the state. With six suites ranging from $299 - $399 per night, revenues in 2016 averaged $110,000 per month. His success has allowed him to expand to three properties, with hopes of franchising to other states where recreational marijuana is also legal. 
Source: Jane Wells, "Weed entrepreneur brings in over $1 million a year running 'bud and breakfast' hotels," cnbc.com, January 18, 2017.
-Refer to the Article Summary.By marketing to recreational marijuana users, Joel Schneider is trying to set his business apart from competing hotels and lodging establishments.This is an example of

Accepted Answer

A)  defending a brand name.
B)  blocking entry into the market.
C)  legally enforcing a trademark.
D)  product differentiation.E) B) and C)
F) C) and D)

Question 12

Which of the following statements is true about marginal revenue?

Accepted Answer

A)  If marginal revenue is zero, it means that quantity demanded falls to zero when a firm changes its price.
B)  If marginal revenue is negative, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price.
C)  If marginal revenue is positive, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price.
D)  Marginal revenue increases as price falls and quantity sold increases.E) All of the above
F) None of the above

Question 13

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Accepted Answer

A)  new rivals entering the market.
B)  a decrease in demand for its product.
C)  demand for the firm's product becomes more elastic.
D)  a decrease in the number of rival products.E) A) and B)
F) All of the above

Question 14

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Accepted Answer

A)  differentiate Air Jordan basketball shoes from other types of basketball shoes.
B)  lower the marginal cost of producing Air Jordan basketball shoes.
C)  increase its profit by raising the price of Air Jordan basketball shoes.
D)  convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities.E) None of the above
F) All of the above

Question 15

Table 13-2
  
Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules.
-Refer to Table 13-2.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

Accepted Answer

A)  $275
B)  $145
C)  $35
D)  $20E) C) and D)
F) A) and D)

Question 16

What are the formulas for total revenue, average revenue, and marginal revenue.

Accepted Answer

Total revenue equals price × q...

Question 17

Figure 13-11
 
-Refer to Figure 13-11.The diagram depicts a firm

Accepted Answer

A)  in a constant-cost industry.
B)  in an increasing-cost industry.
C)  in long-run equilibrium.
D)  that is incurring short-run losses.E) B) and C)
F) C) and D)

Question 18

If a monopolistically competitive firm breaks even, the firm

Accepted Answer

A)  is earning an accounting profit and will have to pay taxes on that profit.
B)  is earning zero accounting and zero economic profit.
C)  should advertise its product to stimulate demand.
D)  should expand production.E) All of the above
F) B) and C)

Question 19

Why are many companies concerned about brand management?

Accepted Answer

Firms are concerned about bran...

Question 20

For allocative efficiency to hold,

Accepted Answer

A)  price must equal marginal revenue of the last unit sold.
B)  price must equal the marginal cost of the last unit produced.
C)  the average variable cost must be minimized in production.
D)  the average total cost must be minimized in production.E) B) and C)
F) All of the above B

Exam 13: Monopolistic Competition: the Competitive Model in a

Is a monopolistically competitive firm productively efficient?

Correct Answer
verified
A

A monopolistically competitive market is described as one in which there are

Correct Answer
verified

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Correct Answer
verified

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

Correct Answer
verified

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Correct Answer
verified

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Correct Answer
verified

The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair.It sells 8 pairs of jeans per day at a price of $90 per pair.The marginal revenue of the eighth pair of jeans is

Correct Answer
verified

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Correct Answer
verified

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 13-8.At the profit-maximizing output level the firm will

Correct Answer
verified

In a monopolistically competitive market, a successful new restaurant

Correct Answer
verified
B

Correct Answer
verified

Which of the following statements is true about marginal revenue?

Correct Answer
verified

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Correct Answer
verified

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Correct Answer
verified

Table 13-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules. -Refer to Table 13-2.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

Correct Answer
verified

What are the formulas for total revenue, average revenue, and marginal revenue.

Correct Answer
verified
Total revenue equals price × q...
View Answer

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

Correct Answer
verified

If a monopolistically competitive firm breaks even, the firm

Correct Answer
verified

Why are many companies concerned about brand management?

Correct Answer
verified
Firms are concerned about bran...
View Answer

For allocative efficiency to hold,

Correct Answer
verified
B

Exam 13: Monopolistic Competition: the Competitive Model in a

Is a monopolistically competitive firm productively efficient?

Correct AnswerverifiedA

A monopolistically competitive market is described as one in which there are

Correct AnswerverifiedShow Answer

If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflects the change a representative firm experiences as the market adjusts to its long-run equilibrium?

Correct AnswerverifiedShow Answer

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

Correct AnswerverifiedShow Answer

If a monopolistically competitive firm is producing 50 units of output where marginal cost equals marginal revenue, total cost is $1,674 and total revenue is $2,000, its average profit is

Correct AnswerverifiedShow Answer

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Correct AnswerverifiedShow Answer

The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair.It sells 8 pairs of jeans per day at a price of $90 per pair.The marginal revenue of the eighth pair of jeans is

Correct AnswerverifiedShow Answer

Figure 13-17 -Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

Correct AnswerverifiedShow Answer

Figure 13-8 Figure 13-8 shows cost and demand curves for a monopolistically competitive producer of iced tea. -Refer to Figure 13-8.At the profit-maximizing output level the firm will

Correct AnswerverifiedShow Answer

In a monopolistically competitive market, a successful new restaurant

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

Which of the following statements is true about marginal revenue?

Correct AnswerverifiedShow Answer

A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except

Correct AnswerverifiedShow Answer

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Correct AnswerverifiedShow Answer

Table 13-2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 13-2 shows the firm's demand and cost schedules. -Refer to Table 13-2.How much additional profit will be made if the firm chooses to produce and sell 5 cases instead of 4 cases?

Correct AnswerverifiedShow Answer

What are the formulas for total revenue, average revenue, and marginal revenue.

Correct AnswerverifiedTotal revenue equals price × q...View AnswerShow Answer

Figure 13-11 -Refer to Figure 13-11.The diagram depicts a firm

Correct AnswerverifiedShow Answer

If a monopolistically competitive firm breaks even, the firm

Correct AnswerverifiedShow Answer

Why are many companies concerned about brand management?

Correct AnswerverifiedFirms are concerned about bran...View AnswerShow Answer

For allocative efficiency to hold,

Correct AnswerverifiedB

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A

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B

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Total revenue equals price × q...
View Answer

Correct Answer
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Firms are concerned about bran...
View Answer

Correct Answer
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B