Question 1

Monopolistic competition and perfect competition are different in that

Accepted Answer

A)  only monopolistically competitive firms advertise.
B)  only monopolistically competitive firms can earn economic losses in the short-run.
C)  only perfectly competitive firms maximize profits where marginal revenue equals marginal cost.
D)  only perfectly competitive firms are characterized by long-run economic profits of zero.E) A) and B)
F) A) and C)

Question 2

The greater the the number and closeness of substitutes available between monopolistically competitive firms,

Accepted Answer

A)  the greater the ability of a firm to raise its price above the price of close substitutes .
B)  the smaller the ability of a firm to raise its price above the price of close substitutes.
C)  the more inelastic the demand curve.
D)  the greater the positive economic profits for a single firm.E) All of the above
F) A) and B)

Question 3

Is monopolistic competition efficient? Explain. What is Edward Chamberlin's view about the efficiency of monopolistic competition?

Accepted Answer

Monopolistic competition is not efficien...

Question 4

Which of the following is FALSE about a comparison between a perfectly competitive firm and a monopolistically competitive firm?

Accepted Answer

A)  A perfectly competitive firm has a horizontal demand curve, while a monopolistically competitive firm has a downward sloping demand curve.
B)  In the short run, a perfectly competitive firm will earn zero economic profits, while a monopolistically competitive firm will earn positive economic profits.
C)  Both the perfectly competitive and monopolistically competitive firm will earn economic profits equal to zero in the long-run.
D)  In the long run, the perfectly competitive firm will produce at the minimum of the average total cost curve, while the monopolistically competitive firm will produce to the left of the minimum of the average total cost curve.E) None of the above
F) All of the above

Question 5

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

Accepted Answer

A)  large number of sellers
B)  sales promotion and advertising
C)  homogeneous product
D)  easy entry of new firms in the long runE) A) and B)
F) None of the above

Question 6

A computer game is an example of

Accepted Answer

A)  a public use product.
B)  an information product.
C)  a capital good.
D)  a credibility product.E) None of the above
F) All of the above

Question 7

-Use the above figure. The economic profit for this firm is

Accepted Answer

A)  zero.
B)  the distance between T and E.
C)  the distance between E and x-axis.
D)  the distance between T and x-axis.E) All of the above
F) A) and B)

Question 8

-In the above figure, the monopolistically competitive firm's profit-maximizing output is

Accepted Answer

A)  1,000 units.
B)  300 units.
C)  900 units.
D)  700 units.E) B) and D)
F) C) and D)

Question 9

For the monopolistically competitive firm, in both the short run and the long run

Accepted Answer

A)  the demand curve is inelastic.
B)  price will exceed marginal cost.
C)  there will be no economic profit.
D)  production will be at minimum average cost.E) A) and B)
F) C) and D)

Question 10

Carol has just purchased a cereal she saw advertised on TV because of the health benefits contained in the ad. The TV ad is an example of

Accepted Answer

A)  mass marketing.
B)  direct marketing.
C)  indirect marketing.
D)  interactive marketing.E) None of the above
F) All of the above

Question 11

The demand curve faced by a monopolistically competitive firm is

Accepted Answer

A)  horizontal.
B)  vertical.
C)  downward sloping.
D)  upward sloping.E) None of the above
F) A) and C)

Question 12

The long-run equilibrium of a monopolistically competitive firm is characterized by

Accepted Answer

A)  a tangency of the average total cost curve with the firm's demand curve.
B)  price equal to marginal cost.
C)  production at the minimum point of the firm's average total cost curve.
D)  production at the minimum point of the firm's average variable cost curve.E) All of the above
F) C) and D)

Question 13

Long-run equilibrium is characterized by zero profits in

Accepted Answer

A)  monopolistic competition only.
B)  perfect competition only.
C)  both perfect competition and monopolistic competition.
D)  market structures in which there are barriers to entry.E) B) and D)
F) A) and C)

Question 14

In the long run, in a monopolistically competitive market, price will be

Accepted Answer

A)  equal to MR.
B)  equal to MC.
C)  greater ATC.
D)  equal to ATC.E) A) and D)
F) All of the above

Question 15

When a firm relies on radio and TV ads to reach potential customers, the firm is engaging in

Accepted Answer

A)  direct marketing.
B)  mass marketing.
C)  interactive marketing.
D)  none of the above.E) All of the above
F) None of the above

Question 16

A monopolistically competitive firm differs from a perfectly competitive firm in the long run in that

Accepted Answer

A)  the demand curve faced by a monopolistically competitive firm is downward sloping, while the demand curve faced by a perfectly competitive firm is horizontal.
B)  profits are positive for a monopolistically competitive firm and zero for a perfectly competitive firm.
C)  profits are zero for a monopolistically competitive firm and positive for a perfectly competitive firm.
D)  marginal cost equals the market price for a monopolistically competitive firm but not for a perfectly competitive firm.E) B) and C)
F) A) and B)

Question 17

A firm's trademark is protected from misuse if it is registered with the

Accepted Answer

A)  U.S.D.A.
B)  U.S. Patent and Trademark Office.
C)  U.S. Supreme Court.
D)  F.C.C.E) All of the above
F) B) and D)

Question 18

Persuasive advertising is mostly used for

Accepted Answer

A)  a logo good.
B)  a search good.
C)  an experience good.
D)  a persuasive good.E) B) and C)
F) A) and B)

Question 19

Firms that produce an information product experience short-run economies of operation because

Accepted Answer

A)  the firm will always produce in the decreasing portion of the marginal cost curve.
B)  of the U-shaped nature of the average total cost curve.
C)  of the U-shaped nature of the average variable cost curve.
D)  the average total cost of producing and selling the product declines as output increases.E) B) and C)
F) A) and D)

Question 20

-In the above figure, total revenue for this profit-maximizing monopolistically competitive firm is

Accepted Answer

A)  $50,000.
B)  $91,000.
C)  $96,000.
D)  $100,000.E) B) and C)
F) A) and D)

Exam 25: Monopolistic Competition

-Use the above figure. The economic profit for this firm is

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A firm's trademark is protected from misuse if it is registered with the

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

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The demand curve faced by a monopolistically competitive firm is

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Long-run equilibrium is characterized by zero profits in

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A monopolistically competitive firm differs from a perfectly competitive firm in the long run in that

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The long-run equilibrium of a monopolistically competitive firm is characterized by

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The greater the the number and closeness of substitutes available between monopolistically competitive firms,

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In the long run, in a monopolistically competitive market, price will be

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Monopolistic competition and perfect competition are different in that

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Carol has just purchased a cereal she saw advertised on TV because of the health benefits contained in the ad. The TV ad is an example of

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-In the above figure, the monopolistically competitive firm's profit-maximizing output is

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Which of the following is FALSE about a comparison between a perfectly competitive firm and a monopolistically competitive firm?

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When a firm relies on radio and TV ads to reach potential customers, the firm is engaging in

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Persuasive advertising is mostly used for

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A computer game is an example of

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For the monopolistically competitive firm, in both the short run and the long run

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Is monopolistic competition efficient? Explain. What is Edward Chamberlin's view about the efficiency of monopolistic competition?

Correct AnswerverifiedMonopolistic competition is not efficien...View AnswerShow Answer

Firms that produce an information product experience short-run economies of operation because

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-In the above figure, total revenue for this profit-maximizing monopolistically competitive firm is

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Monopolistic competition is not efficien...
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