Question 1

Excess capacity characterizes firms in monopolistically competitive markets,even in situations of long-run equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Accepted Answer

A)   average revenue exceeds marginal revenue
B)   marginal revenue exceeds average revenue
C)   average revenue is equal to marginal revenue
D)   revenue is always maximized along with profitE) A) and B)
F) A) and C)

Question 3

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.E) A) and C)
F) B) and C)

Question 4

Critics of advertising argue that advertising

Accepted Answer

A)   creates desires that otherwise might not exist.
B)   hinders competition.
C)   often fails to convey substantive information.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 5

The product-variety externality states the benefits to consumers from the introduction of a new product.

Accepted Answer

A) True 
 B)False

Question 6

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The general term for market structures that fall somewhere between monopoly and perfect competition is

Accepted Answer

A)   incomplete markets.
B)   imperfectly competitive markets.
C)   oligopoly markets.
D)   monopolistically competitive markets.E) A) and B)
F) A) and C)

Question 9

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is correct?

Accepted Answer

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.E) None of the above
F) All of the above

Question 11

Figure 16-1. The figure is drawn for a monopolistically competitive firm.
 
-Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Accepted Answer

A)   $-30.
B)   $22.
C)   $36.
D)   $42.E) A) and C)
F) None of the above

Question 12

The two types of imperfectly competitive markets are

Accepted Answer

A)   markets with differentiated products and monopoly.
B)   markets with differentiated products and oligopoly.
C)   oligopoly and monopoly.
D)   monopolistic competition and oligopoly.E) A) and B)
F) B) and C)

Question 13

The entry of new firms into a monopolistically competitive market is accompanied by

Accepted Answer

A)   both positive and negative externalities.
B)   only positive externalities.
C)   only negative externalities.
D)   only private profit opportunities (no externalities) .E) B) and C)
F) B) and D)

Question 14

When a firm operates with excess capacity,

Accepted Answer

A)   additional production would lower the average total cost.
B)   additional production would increase the average total cost.
C)   it must be a perfectly competitive firm.
D)   it must be a monopolistically competitive firm.E) All of the above
F) A) and B)

Question 15

An oligopoly

Accepted Answer

A)   has a concentration ratio of less than 50 percent.
B)   is a price taker.
C)   is a type of imperfectly competitive market.
D)   has many firms rather than just one firm or a few firms.E) A) and B)
F) A) and C)

Question 16

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 C?

Accepted Answer

A)   about 23%
B)   about 34%
C)   about 43%
D)   about 52%E) A) and D)
F) None of the above

Question 17

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 much profit will the firm earn at the profit-maximizing level of output?

Accepted Answer

A)   $4
B)   $6
C)   $8
D)   $10E) A) and D)
F) A) and B)

Question 18

Joe's Juice Shop operates in a monopolistically competitive market.Joe's is currently producing where its average total cost is minimized.In the long run we would expect Joe's output to

Accepted Answer

A)   decrease and average total cost to increase.
B)   decrease and average total cost to decrease.
C)   remain unchanged as Joe's is doing the best it can.
D)   increase and average total costs to decrease.E) None of the above
F) C) and D)

Question 19

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=$0E) B) and D)
F) None of the above

Question 20

Which of the following is not a characteristic of monopolistic competition?

Accepted Answer

A)   a large number of sellers
B)   firms are price takers
C)   free entry into the market
D)   a differentiated productE) A) and B)
F) A) and C)

Exam 16: Monopolistic Competition.

Excess capacity characterizes firms in monopolistically competitive markets,even in situations of long-run equilibrium.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Correct Answer
verified

Which of the following is not a characteristic of monopolistic competition?

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

The entry of new firms into a monopolistically competitive market is accompanied by

Correct Answer
verified

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

Correct Answer
verified

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Correct Answer
verified

The general term for market structures that fall somewhere between monopoly and perfect competition is

Correct Answer
verified

Critics of advertising argue that advertising

Correct Answer
verified

Correct Answer
verified

The product-variety externality states the benefits to consumers from the introduction of a new product.

Correct Answer
verified

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Correct Answer
verified

An oligopoly

Correct Answer
verified

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 C?

Correct Answer
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Figure 16-1. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Correct Answer
verified

When a firm operates with excess capacity,

Correct Answer
verified

The two types of imperfectly competitive markets are

Correct Answer
verified

Joe's Juice Shop operates in a monopolistically competitive market.Joe's is currently producing where its average total cost is minimized.In the long run we would expect Joe's output to

Correct Answer
verified

Exam 16: Monopolistic Competition.

Excess capacity characterizes firms in monopolistically competitive markets,even in situations of long-run equilibrium.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of monopolistic competition?

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

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

The entry of new firms into a monopolistically competitive market is accompanied by

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

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

Correct AnswerverifiedShow Answer

The general term for market structures that fall somewhere between monopoly and perfect competition is

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The product-variety externality states the benefits to consumers from the introduction of a new product.

Correct AnswerverifiedShow Answer

Monopolistically competitive firms,like monopoly firms,maximize their profits by charging a price that exceeds marginal cost.

Correct AnswerverifiedShow Answer

An oligopoly

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 C?

Correct AnswerverifiedShow Answer

Figure 16-1. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-1.If the average variable cost is $12 at the profit-maximizing quantity,and if the firm's fixed costs amount to $30,then the firm's maximum profit is

Correct AnswerverifiedShow Answer

When a firm operates with excess capacity,

Correct AnswerverifiedShow Answer

The two types of imperfectly competitive markets are

Correct AnswerverifiedShow Answer

Joe's Juice Shop operates in a monopolistically competitive market.Joe's is currently producing where its average total cost is minimized.In the long run we would expect Joe's output to

Correct AnswerverifiedShow Answer

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