Quiz 10: Monopolistic Competition and Oligopoly

Firms may easily enter a monopolistically competitive market.

Product differentiation helps determine the slope of the demand curve facing a firm in monopolistic competition.

Monopolistic competitors are protected by barriers to entry.

The forces that determine the cost of production are largely independent of the forces that shape demand.

The term monopolistic competition A)is an alternate expression for monopoly B)is used to describe perfect competition with strong entry barriers C)denotes an industry with one seller of many differentiated products D)denotes an industry with many sellers of homogeneous products E)denotes an industry with many sellers of differentiated products

Monopolistically competitive industries consist of A)one firm selling several products B)one firm selling one product C)many firms, all selling identical products D)many firms, each selling a slightly different product E)many firms, each selling a completely different product

Collusion among firms to raise price is rare in monopolistically competitive markets because A)there are too many firms B)there are too few firms C)there is only one firm D)products are homogeneous E)price leadership is used instead

Monopolistically competitive firms ignore the effect of their decisions upon other firms in the industry because A)each firm is large relative to the market B)each firm is small relative to the market C)there are few sellers in the market D)there is only one seller in the market E)all firms follow the same known pricing rules

Monopolistic competition is different from perfect competition because monopolistic competitors produce A)a homogeneous product B)a homogeneous but unique product C)identical products D)differentiated products E)products similar to those produced by a monopoly

If Family Travel Agency, a monopolistic competitor, offers services that are differentiated from the services of other producers in the industry, it A)faces a perfectly elastic demand curve B)is a price taker C)has some power to control the price it charges D)faces a perfectly inelastic demand curve E)produces a product with no close substitutes

A monopolistically competitive firm can raise price somewhat due to A)product differentiation B)barriers to entry C)product similarity D)its homogeneous product E)high tariffs

The demand curve facing Imelda's Shoe Boutique, a monopolistically competitive firm, A)is horizontal because Imelda's is small relative to the market as a whole B)is horizontal because Imelda's is large relative to the market as a whole C)slopes downward because Imelda's is small relative to the market as a whole D)slopes downward because Imelda's sells a differentiated product E)slopes downward because Imelda's firm is the entire industry

Monopolistically competitive firms use product differentiation to increase the price elasticity of demand.

Monopolistic competition is best described as A)many firms with some control over price, and some product differentiation B)many firms with no control over price, producing identical products C)a few firms with some control over price, producing highly differentiated products D)a few firms with no control over price, producing similar products E)a single firm producing all of the output for the industry, with strong control over price

If a monopolistically competitive firm raises its price, it A)loses all of its customers (sales drop to zero) B)loses some, but not all, of its customers C)loses very few customers D)loses no customers at all E)gains customers (sales increase)

Which of the following is most likely produced in a monopolistically competitive market? A)soybeans B)autos C)fast food D)oil E)local phone service

Which of the following is most likely produced in a monopolistically competitive market? A)restaurant meals B)computer chips C)firewood D)motorcycles E)soft drink

A firm could differentiate its product by all of the following means except one.Which is the exception? A)making the product available at a number of different locations B)increasing the number of services that accompany the product C)making the product physically different from other products D)using packaging or advertising to create a special subjective image of the product in the consumer's mind E)emphasizing that the product provides the same benefits to consumers as the others on the market, even when it is really physically different

All of the following are examples of product differentiation except one.Which is the exception? A)developing a new video game or a computer program called "How to Teach Your New Dog Old Tricks" B)manufacturing a car that minimizes outside noise relative to other cars C)lowering the price of a good in a special sale D)providing movies and special meals on airline flights E)making sodium-free, caffeine-free colas

Economic analysis of product differentiation leads to all of the following conclusions except one.Which is the exception? A)Product differentiation makes it harder for firms to collude. B)Product differentiation makes price leadership harder to maintain. C)Product differentiation sometimes contributes to wasteful allocation of resources. D)Product differentiation must be based on real, substantive differences among products. E)There is a tradeoff between using resources efficiently and providing consumers with wide choices.

When firms differentiate their products, they A)provide information to consumers with no additional use of productive resources B)always increase their profits C)always create real differences among products D)frequently create artificial or superficial differences among products, thus raising production costs E)usually strain the physical capacity of their plants

When firms in an industry produce differentiated products, A)long-run economic profit will always be zero B)short-run economic profit will always be positive C)the demand curves facing firms will always be perfectly elastic D)the demand curves facing firms will always be downward-sloping E)new firms will always have an incentive to enter the industry in the long run

Monopolistic competitors are A)price takers B)price searchers C)price maximizers D)price ignorers E)collusive price fixers

In economics, products are considered "differentiated" only if A)they are physically or chemically different B)sellers decide that they are different C)buyers think that they are different D)the government determines that they are different E)they are produced by different firms

Compared to regular grocery stores, convenience stores have A)higher prices and a more limited selection of goods B)higher prices and a greater selection of goods C)lower prices and a more limited selection of goods D)lower prices and a greater selection of goods E)equal prices and an equal selection of goods

A monopolistically competitive firm produces where demand is inelastic.

Firms in monopoly or monopolistically competitive market structures do not have traditional supply curves as firms in perfect competition do.

A monopolistic competitor's demand curve is A)perfectly elastic B)less elastic than a monopolist's or oligopolist's but more elastic than a perfect competitor's C)as elastic as an oligopolist's D)more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's E)perfectly inelastic

The demand curve facing a firm will be more elastic, A)the fewer the number of competing firms B)the more differentiated the product C)the more substitutes there are for its product D)the greater the firm's ability to control price E)the larger the profit the firm can make

What do monopolistic competition, pure monopoly, and perfect competition have in common? A)free entry B)long-run economic profits C)differentiated product D)price taking E)the rule of profit maximization

Exhibit 10-1 In Exhibit 10-1, the monopolistic competitor's profit-maximizing level of output is A)75 units B)100 units C)125 units D)150 units E)137.5 units

Exhibit 10-1 In Exhibit 10-1, the price that the monopolistic competitor will charge at the profit-maximizing level of output is A)$2 B)$4 C)$8 D)$9 E)$10

Exhibit 10-1 The monopolistic competitor in Exhibit 10-1 is in A)long-run equilibrium because price equals average total cost B)long-run equilibrium because marginal cost equals marginal revenue C)long-run equilibrium because price exceeds marginal cost D)short-run equilibrium because it is earning a positive economic profit E)short-run equilibrium because price equals average total cost

Exhibit 10-1 In Exhibit 10-1, the monopolistic competitor's total economic profit at the profit-maximizing level of output is A)$0 B)$4 C)$600 D)$6 E)$750

Exhibit 10-2 Consider Exhibit 10-2.If the firm is charging price P* for output q*, then in order to minimize loss in the short run, the firm should A)shut down because price is greater than average variable cost B)shut down because price is greater than marginal cost C)shut down because price is less than average variable cost D)continue to produce because price is greater than average variable cost E)continue to produce because price is greater than marginal cost

Exhibit 10-3 The profit-maximizing output for the firm in Exhibit 10-3 is A)0 units B)1 unit C)3 units D)5 units E)impossible to determine because MC and MR are not known

Exhibit 10-3 The profit-maximizing price for the firm in Exhibit 10-3 is A)$0 B)$27 C)$21 D)$15 E)impossible to determine because MR and MC are not known

Exhibit 10-3 At the profit-maximizing output, the firm in Exhibit 10-3 is earning A)an economic profit of $38 B)an economic profit, but the amount cannot be determined C)zero economic profit D)an economic profit of $32 E)an economic loss

Exhibit 10-3 At the profit-maximizing output, the monopolistically competitive firm in Exhibit 10-3 is in A)long-run equilibrium because price equals average total cost B)long-run equilibrium because price is less than average total cost C)short-run equilibrium because price is greater than average total cost D)short-run equilibrium because there is an economic loss E)short-run equilibrium because there is zero economic profit

In the short run, a monopolistically competitive firm is A)guaranteed to earn zero economic profit B)guaranteed to earn economic profit C)guaranteed to earn an economic loss D)guaranteed to earn either zero or positive economic profit E)not guaranteed any level of economic profit

Exhibit 10-4 In the short run, which of the following should the firm in Exhibit 10-4 do? A)Produce 10 units at a price of $36 per unit. B)Produce 10 units at a price of $24 per unit. C)Produce 10 units at a price of $40 per unit. D)Produce 15 units at a price of $32 per unit. E)We cannot determine what the firm should do without knowing its average variable cost.

Exhibit 10-4 For the situation depicted in Exhibit 10-4, what will happen in the long-run? A)New technology will lower average total costs and increase profits for the firm. B)Firms will exit this market causing economic profit to increase. C)Product differentiation will lead to an increase in profitablility. D)New firms will enter the market driving economic profit to zero. E)Nothing, the situation will remain the same.

Exhibit 10-5 In the short run, the firm in Exhibit 10-5 should A)shut down B)produce 8 units at a price of $11 per unit C)produce 8 units at a price of $10 per unit D)produce 8 units at a price of $9 per unit E)produce 10 units at a price of $9 per unit

Exhibit 10-5 In the long run, the firm in Exhibit 10-5 can expect A)to shut down B)entry into the industry which will reduce the demand for their product and lower their profit C)exit from the industry which will increase demand for their product and increase their profitability D)competitors to differentiate their products which will reduce the demand for their product and lower their profit E)no change in the industry

Exhibit 10-6 In Exhibit 10-6, what is the profit-maximizing price for this monopolistic competitor in the short run? A)$7 B)$6 C)$5 D)$4 E)$3

Exhibit 10-6 In Exhibit 10-6, what is the maximum profit this monopolistic competitor can earn in the short run? A)$40 B)$4 C)$48 D)$8 E)$0

If a monopolistically competitive firm can earn a profit, it will adjust production until A)MR > AVC B)MR = ATC C)MC > MR D)MR = AR E)MR = MC

Exhibit 10-7 Assume that the firm in Exhibit 10-7 is maximizing profit.Its total revenue is A)$5, 320 B)$5, 700 C)$4, 750 D)$8, 120 E)$8, 100

Exhibit 10-7 At the profit-maximizing output level, total cost for the firm in Exhibit 10-7 is approximately A)$5, 700 B)$5, 320 C)$4, 750 D)$4, 940 E)$8, 100

Exhibit 10-7 At the profit-maximizing output level, the firm in Exhibit 10-7 is A)earning economic profit of $760 B)earning economic profit of $950 C)earning zero economic profit D)earning economic profit of $990 E)suffering a loss of $1, 000

Exhibit 10-7 In the long run, the firm in Exhibit 10-7 can expect A)to earn an economic profit of $760 B)earn an economic profit of $950 C)earn zero economic profit D)earn an economic profit of $990 E)suffer a loss of $1, 000

Assume a monopolistically competitive firm is earning an economic profit.The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23.The firm should A)change neither its price nor its output level B)reduce its price and increase its output level C)increase its price and reduce its output level D)reduce both its price and its output level E)increase both its price and its output level

A rise in demand for restaurant meals is likely to cause which of the following in the short run? A)economic losses for each restaurant B)a lower price for each restaurant meal C)fewer restaurants in the industry D)more restaurants in the industry E)economic profit for restaurants

A rise in demand for restaurant meals is likely to cause which of the following in the long run? A)economic losses for each restaurant B)a lower price for each restaurant meal C)fewer restaurants in the industry D)more restaurants in the industry E)economic profit for restaurants

In both monopolistic competition and non-price-discriminating monopoly, A)the marginal revenue curve lies above the average revenue curve B)the marginal revenue curve lies above the demand curve C)the marginal revenue curve lies below the demand curve D)marginal revenue is equal to average revenue E)marginal revenue is equal to price

A monopolistically competitive firm is producing an output level at which marginal revenue is greater than marginal cost.This firm should __________ quantity and __________ price to increase profit or reduce losses. A)increase, increase B)increase; decrease C)decrease; increase D)decrease; decrease E)increase; not change

A monopolistically competitive firm is producing an output level at which marginal revenue is less than marginal cost.This firm should __________ quantity and __________ price to increase profit or reduce losses. A)increase, increase B)increase; decrease C)decrease; increase D)decrease; decrease E)increase; not change

Exhibit 10-8 Assume the firm in Exhibit 10-8 is currently charging price P and producing output level Q.In order to maximize profit (or minimize loss), the firm should A)charge more and sell less B)charge less and sell more C)charge less and sell less D)charge more and sell more E)continue to charge P and sell Q

Exhibit 10-9 In order to maximize profit or minimize loss, the firm in Exhibit 10-9 should A)produce 100 units of output and charge $15 B)produce 100 units of output and charge $8 C)produce more than 100 units of output and charge less than $8 D)produce slightly less than 100 units of output and charge more than $8 E)shut down

Exhibit 10-9 If the firm in Exhibit 10-9 produces 100 units of output, it will have A)both d and e B)variable cost of slightly less than $800 C)fixed cost of slightly more than $700 D)total cost of $1, 500 E)total revenue of $800

Which of the following describes the relationship among market price (P), average revenue (AR), and marginal revenue (MR)for a firm in monopolistic competition. A)P = AR = MR B)P > AR = MR C)P = AR > MR D)P > AR > MR E)P = AR < MR

A profit-maximizing firm in monopolistic competition should shut down in the short run A)if marginal revenue is less than price B)if price is always less than average total cost C)if price is always less than average fixed cost D)if price is always less than average variable cost E)under no circumstances

In the long run in monopolistic competition, firms earn zero economic profit.

If a monopolistically competitive firm is in long-run equilibrium and average cost equals $150, then the market price must be $150.

Monopolistic competition is similar to A)perfect competition because the firms face downward-sloping demand curves and can earn only a normal profit in the long run B)pure monopoly because the firms face downward-sloping demand curves and can earn only a normal profit in the long run C)perfect competition because the firms face downward-sloping demand curves and similar to pure monopoly in that the firms can earn only a normal profit in the long run D)pure monopoly because the firms face downward-sloping demand curves and similar to perfect competition in that the firms can earn only a normal profit in the long run E)pure monopoly because the firms face downward-sloping demand curves and can earn an economic profit in the long run

In the long run, a monopolistically competitive firm will A)produce a greater variety of goods than do firms in other market structures B)produce a greater output level than would a perfectly competitive firm C)produce where price equals average total cost D)earn an economic profit E)suffer a loss because of its advertising budget

Suppose that a monopolistically competitive firm is in long-run equilibrium.The firm's demand curve is tangent to its average cost curve at Q = 25.Average cost is minimized at Q = 35, where average cost is $50.Which of the following is true? A)This firm maximizes profit at an output level of 25 units. B)This firm maximizes profit at an output level of 35 units. C)This firm maximizes profit at an output level less than 25 units. D)This firm maximizes profit at an output level greater than 35 units. E)There is not enough information to find the firm's profit-maximizing level of output.

Suppose that a monopolistically competitive firm is in long-run equilibrium.The firm's demand curve is tangent to its average cost curve at Q = 25.Average cost is minimized at Q = 35, where average cost is $50.Which of the following is true? A)This firm charges $50 for the good. B)This firm charges more than $50 for the good. C)This firm charges less than $50 for the good. D)The firm has excess capacity at all output levels greater than 35 units. E)Average cost is $50 at the profit-maximizing output level.

Because of easy entry, monopolistically competitive firms will A)produce at the lowest average total cost B)charge a price equal to marginal cost C)earn no economic profit in the long run D)take advantage of all economies of scale E)earn no economic profit in the short run

Exhibit 10-10 In Exhibit 10-10, what is the maximum profit this monopolistic competitor can earn in the long run? A)$40 B)$4 C)$48 D)$8 E)$0

Exhibit 10-11 Assume that the firm in Exhibit 10-11 maximizes profit.Its total revenue is A)$5, 200 B)$4, 000 C)$3, 600 D)$5, 600 E)$3, 200

Exhibit 10-11 At the profit-maximizing output level, total cost for the firm in Exhibit 10-11 is A)$5, 200 B)$4, 000 C)$3, 600 D)$5, 600 E)impossible to determine

Exhibit 10-11 At the profit-maximizing output level, the firm in Exhibit 10-11 is A)earning economic profit of $400 B)earning economic profit of $200 C)earning zero economic profit D)suffering a loss of $200 E)suffering a loss of $400

A firm will only earn normal profit in the long run A)if firms can freely enter or leave the market B)if firms do not try to maximize profit C)only if the industry is perfectly competitive D)whenever products are not differentiated E)if barriers to entry exist

In the long run, Bubba's Baby Boutique, a monopolistically competitive firm, A)earns zero normal profit but positive economic profit B)earns normal profit but zero economic profit C)earns normal and economic profit D)earns zero normal and economic profit E)might earn any level of economic profit; no level is guaranteed

In the long run, the economic profit of Hoot's Pump Chicken 'n' Ribs, a monopolistic competitor, A)is not eliminated because competition is not perfect B)is not eliminated because the demand curve slopes downward C)is eliminated because of new firms entering the industry D)is eliminated because of firms leaving the industry E)is not eliminated because new firms cannot enter the industry

A permanent decrease in demand for convenience store services is likely to cause which of the following in the long run? A)an economic loss for each firm B)a higher price for each firm's output C)fewer firms in the industry D)more firms in the industry E)economic profit for each firm

If the firms in a monopolistically competitive industry are suffering short-run losses, which of the following will occur in the long run? A)Some firms will enter the industry. B)Customers of firms that leave the industry will switch to remaining firms. C)Firms that remain in the industry will face reduced demand. D)Firms will continue to incur losses. E)There will be no excess capacity.

If the firms in a monopolistically competitive industry are earning short-run profit, which of the following is not likely to occur in the long run? A)New firms will enter the industry. B)New firms in the industry will draw customers away from existing firms. C)Existing firms in the industry will face a decrease in demand. D)Firms will continue to earn profit. E)Firms will produce with some excess capacity.

In the long run in monopolistic competition, the demand curve facing the typical firm A)is perfectly elastic B)slopes upward C)is tangent to the firm's average total cost curve D)lies above the firm's average total cost curve E)is the same as the portion of the firm's marginal cost curve above average variable cost

As new monopolistically competitive firms enter the market, the demand facing each firm __________, causing the price charged by each firm to __________.In the long run, each firm will earn a __________ profit. A)falls; rise; positive B)rises; fall; positive C)falls; rise; normal D)rises; fall; normal E)falls; fall; normal

If the demand curve facing the Acme Awl Company is tangent to its average total cost curve, all of the following statements are true except one.Which is the exception? A)Economic profit is zero. B)A normal profit exists. C)Marginal cost must exceed marginal revenue. D)Acme has excess capacity. E)Firms have no incentive to enter or leave this industry.

In the long run in monopolistic competition, a firm will not produce the output level that minimizes average cost because A)that output level is less than the profit-maximizing one B)at that output level, MC is greater than MR C)at that output level, P is greater than MR D)demand is horizontal E)that would leave the firm with excess capacity

Which of the following characteristics does perfect competition share with monopolistic competition? A)price-taking firms B)zero long-run economic profit C)homogeneous product D)some barriers to entry E)economies of scale in production

Monopolistically competitive firms A)are guaranteed to earn short-run economic profit B)may earn short-run economic profits, although long-run economic profit is typically zero C)may earn economic profit both in the short run and in the long run D)earn zero economic profit both in the short run and in the long run E)can only earn an economic profit in the inelastic portion of their demand curves

In the long run, economic profit for a monopolistically competitive firm A)is zero, due to the lack of barriers to entry B)is zero, due to product differentiation C)may be positive, due to strong barriers to entry D)may be positive, due to product differentiation E)may be positive, due to advertising and product promotion

Exhibit 10-12 The profit-maximizing (or loss-minimizing)output for the firm in Exhibit 10-12 is A)zero (i.e., a shut down case) B)700 units C)1, 000 units D)more than 700 and less than 1, 000 units E)more than 1, 000 units

Exhibit 10-12 The profit-maximizing (or loss-minimizing)price the firm would charge in Exhibit 10-12 is A)nonexistent, since the firm should shut down B)$3.25 C)$3.00 D)$2.50 E)between $2.50 and $3.00

Exhibit 10-12 At the profit-maximizing (or loss-minimizing)output and price, the firm in Exhibit 10-12 would A)be earning zero economic profit (i.e., breaking even) B)be earning an economic profit C)be earning an economic loss D)be better off to shut down since total revenue does not cover fixed costs E)have to expand to stay in business in the long run

In the long run, a monopolistically competitive firm will find A)its demand curve shifting until price equals average total cost B)its cost curve shifting until price equals average total cost C)its demand curve shifting until marginal revenue equals marginal cost D)its cost curve shifting until marginal revenue equals marginal cost E)no changes in its demand or cost curves if it is earning an economic profit

Suppose that firms in a monopolistically competitive industry are earning short-run economic profits.In the long run, the demand curve facing each individual firm can be expected to A)shift to the left and become flatter B)shift to the left and become steeper C)shift to the right and become flatter D)shift to the right and become steeper E)remain constant

The first video rental outlets A)earned short-run economic profits because they faced little competition B)suffered short-run economic losses until videos caught on and demand for them increased C)were able to earn long-run economic profits because of barriers to entry D)earned only normal profits because the industry is perfectly competitive E)provided a good example of an oligopoly

As a result of the economic profit earned by the first video rental outlets, A)existing firms were able to successfully lobby the government for patent protection B)competitors were attracted to the industry, and their entry reduced economic profit C)demand dried up D)Blockbuster saw an opportunity to take over the industry E)competitors were discouraged from entering the industry

The historical trend in the video rental industry A)has been one of increasing economic profits B)has been cyclical in the sense that profits decrease, then increase C)reflects the trend toward market concentration in all oligopolies D)has been one of increasing market concentration E)suggests the need for government regulation to eliminate price discrimination

Fixed costs in the video rental industry are A)high because of the extensive advertising in that industry B)high because of economies of scale C)low because of economies of scale D)higher in the long run than in the short run E)low

In the long run in monopolistic competition, all economies of scale are exhausted.

Excess capacity is defined as the difference between a firm's maximum possible output and its actual output.

Which of the following is inconsistent with the model of perfect competition? A)ease of entry into an industry B)ease of exit from an industry C)many buyers and sellers in the industry D)advertising of product differences in the industry E)a horizontal demand curve facing each firm in the industry

In which of the following market structures is a firm most likely to advertise extensively and fear entry of new firms? A)perfect competition B)pure monopoly C)monopolistic competition D)oligopoly E)both perfect competition and monopolistic competition

Which of the following is true of the relationship between price and marginal cost under monopolistic competition? A)P = MC at all levels of output B)P = MC only at the profit-maximizing quantity C)P > MC at the profit-maximizing quantity D)P < MC at the profit-maximizing quantity E)P < MC at the quantities below the profit-maximizing quantity

In long-run equilibrium, a monopolistically competitive firm will produce A)at the minimum average cost B)at full capacity C)along the downward-sloping portion of its ATC curve D)along the upward-sloping portion of its ATC curve E)at the minimum of marginal cost

At the profit-maximizing output, price is greater than marginal cost A)for a monopolistically competitive firm only in the short run B)for a monopolistically competitive firm only in the long run C)for a monopolistically competitive firm in both the short run and the long run D)for a perfectly competitive firm only in the short run E)for a perfectly competitive firm only in the long run

In the long run, the output of a monopolistically competitive firm A)exceeds that of an otherwise similar perfectly competitive firm B)is less than that of an otherwise similar perfectly competitive firm C)is at the point at which LRAC is minimized D)equals that of an otherwise similar perfectly competitive firm E)is less than that of an otherwise similar monopolist

A monopolistically competitive firm A)earns no long-run economic profit and is therefore allocatively efficient B)earns no long-run economic profit and therefore produces at the minimum point of its ATC curve C)earns no long-run economic profit and is allocatively efficient even though it is not producing at the minimum point of its ATC curve D)earns no long-run economic profit, is allocatively inefficient, and does not produce at the minimum point of its ATC curve E)has a chance of making a long-run economic profit and is therefore allocatively inefficient

Although both perfectly competitive and monopolistically competitive firms earn normal profits in the long run, monopolistically competitive firms will not A)operate where price equals marginal cost B)charge a higher price than firms in perfect competition C)produce a smaller quantity than firms in perfect competition D)produce where price equals average total cost E)exit when demand falls below long-run average costs

Which of the following is true of firms in both monopolistic competition and perfect competition? A)Firms face a horizontal demand curve. B)Price exceeds marginal revenue. C)Firms can enter and leave the industry with relative ease. D)Price exceeds marginal cost. E)Products are differentiated.

One difference between perfect competition and monopolistic competition is that A)in perfect competition, firms cannot earn a long-run economic profit B)in perfect competition, firms take full advantage of economies of scale in long-run equilibrium; in monopolistic competition, firms do not C)only under perfect competition is there ease of entry and exit D)in monopolistic competition, the firm's demand curve is horizontal; in perfect competition, the firm's demand curve slopes downward E)in perfect competition, there are many firms; under monopolistic competition, there are few firms

Which of the following characteristics does perfect competition have in common with monopolistic competition? A)price-taking firms B)homogeneous products C)no barriers to entry D)horizontal demand curve E)neither market advertises

Compared to a firm in perfect competition, the monopolistically competitive firm tends to A)produce less and charge a higher price B)produce less and charge a lower price C)produce more and charge a lower price D)produce more and charge a higher price E)produce the same quantity

Excess capacity typically occurs A)in the short run in perfect competition B)in the short run in monopolistic competition C)in long-run equilibrium in perfect competition D)in long-run equilibrium in monopolistic competition E)usually in markets experiencing an increase in demand

Which of the following is unique to perfect competition? A)The individual firm cannot earn economic profit in the long run. B)It is easy for new firms to enter the industry. C)The market demand curve slopes downward. D)The demand curve facing an individual firm is perfectly elastic. E)The firms in the industry produce a homogeneous product.

Monopolistically competitive firms do not achieve allocative efficiency in the long run because A)marginal cost equals marginal revenue B)marginal cost is greater than marginal revenue C)marginal cost is less than marginal revenue D)price is less than marginal cost E)price is greater than marginal cost

Monopolistically competitive firms do not achieve productive efficiency because A)entry of firms raises production costs in the long run B)barriers to entry allow profit to be earned in the long run C)price is greater than marginal cost at the profit maximizing output level D)profit is maximized at a quantity where average total cost is not minimized E)there is no threat of entry in the long run

Firms in monopolistic competition and perfect competition typically A)are price takers B)produce identical products C)earn zero economic profit in the long run D)face a downward-sloping demand curve E)face an upward-sloping total revenue curve at all rates of output

Monopolistic competition is similar to A)perfect competition, in that firms face downward-sloping demand curves and earn zero long-run economic profit B)pure monopoly, in that firms face downward-sloping demand curves and can earn economic profits both in the short run and in the long run C)perfect competition, in that firms face perfectly elastic demand curves and earn zero long-run economic profit D)pure monopoly, in that firms can earn economic profits both in the short run and in the long run, and similar to perfect competition, in that firms face perfectly elastic demand curves E)pure monopoly, in that firms face downward-sloping demand curves, and similar to perfect competition, in that long-run economic profit is zero

If marginal revenue is less than price for a firm, it must be true that the firm A)is a monopoly B)is in perfect competition C)is in monopolistic competition D)faces a perfectly elastic demand curve E)faces a downward-sloping demand curve

Which of the following characteristics distinguishes oligopoly from other market structures? A)a horizontal demand curve B)a downward-sloping demand curve C)production of homogeneous outputs D)production of differentiated outputs E)interdependence among firms in the industry

Oligopolistic industries consist of A)a few independent firms B)a few interdependent firms C)many interdependent firms D)many independent firms E)a small monopoly

The automobile, breakfast cereal, and tobacco industries are examples of A)monopolistic competition B)oligopoly C)perfect competition D)monopoly E)monopsony

The defining characteristic of oligopoly is that each firm A)produces the same output as its rivals B)acts independently of its rivals C)is mutually interdependent D)is atomistic E)advertises how its products are different from its rivals' products

An intersection known as Four Corners lies 300 miles from the nearest town.At this intersection are three independently owned gas stations and one small pharmacy.Which of the following is true? A)The firms are all perfectly competitive because of their size. B)It would be easier for all four firms to form a cartel than for only the gas stations to do so. C)The gas stations are monopolistically competitive because there are so few of them that they are almost monopolists. D)The gas stations are perfectly competitive; the pharmacy is not. E)The gas stations are oligopolists; the pharmacy is a monopolist.

Which of the following is unique to oligopoly among all the market structures? A)product differentiation B)profit maximization C)mutual interdependence D)advertising E)long-run economic profits

Oligopolists are more sensitive to the pricing and output policies of their rivals when A)all firms produce identical products B)their products are highly differentiated C)there is freedom of entry and exit D)there are barriers to entry E)there are many firms in the industry

The defining characteristic of oligopoly is product differentiation.

Something is called a barrier to entry only if it makes entry into an industry absolutely impossible.

When there are barriers to entry, a profit-maximizing firm already in the industry can charge any price it wants, even in the long run.

It is harder to explain the behavior of firms in oligopoly than in other market structures because in oligopoly A)the firms act independently of each other B)firms base their decisions on what their rivals do C)only differentiated products are produced D)only homogeneous products are produced E)the demand curve can slope upward

Which of the following is not considered a barrier to entry? A)economies of scale B)patents C)control of a scarce resource D)licensing E)perfect price discrimination

For firms in an oligopoly to be interdependent, A)goods must be undifferentiated B)goods must be differentiated C)firms must be small D)barriers to entry must be minimal E)goods can be either undifferentiated or differentiated

An oligopoly is characterized by A)few firms, which have control over market price B)many firms and some barriers to entry C)a large number of firms and no barriers to entry D)a single firm and no barriers to entry E)a single firm and significant barriers to entry

In which market structure(s)might firms produce an undifferentiated product? A)perfect competition only B)perfect competition and oligopoly C)monopolistic competition only D)perfect competition and monopolistic competition E)monopoly only

If Ford raises the price of its automobiles, the demand curve for GM automobiles A)shifts to the left B)is unaffected C)becomes more elastic D)shifts to the right E)becomes vertical

In an oligopoly, the demand curve facing an individual firm depends upon A)the behavior of competing firms B)the shape of the firm's average total cost curve C)the shape of the firm's marginal cost curve D)the firm's supply curve E)the shape of the firm's average variable cost curve

Interdependent decision making on price, quality, or advertising is characteristic of A)perfect competition B)monopolies C)oligopolies D)monopolistic competition E)both oligopolies and monopolistic competition

There are multiple models of pricing behavior in oligopolistic markets because A)it is difficult to predict how rival firms will react to any pricing decision B)the demand curve slopes upward for these firms C)firms could earn profit in the long run unlike other markets D)price has a direct impact on profit for a firm in oligopoly E)the products are not identical in terms of quality, image, location

In oligopoly, minimum efficient scale is large relative to the market.

Economies of scale yield A)declining average cost as output increases B)declining marginal cost as output increases C)declining total cost as output increases D)diminishing average returns as output increases E)increasing marginal revenue as output increases

Exhibit 10-13 All of the following statements regarding Exhibit 10-13 are true except one.Which is the exception? A)The firm represented in the exhibit will likely be a perfect competitor. B)There are economies of scale in this industry. C)The minimum efficient quantity is 1, 000 units. D)At 500 units there is excess capacity. E)A firm too small to produce at least 1, 000 units will have difficulty surviving in this industry.

Exhibit 10-13 Consider Exhibit 10-13.If two firms each produced 500 units, the total cost of supplying 1, 000 units would be A)$6 B)$4, 000 C)$4 D)$3, 000 E)$6, 000

Exhibit 10-14 Which of the curves shown in Exhibit 10-14 best represents the long-run average cost curve for an oligopolist? A)Curve a B)Curve b C)Curve c D)Curve d E)Curve e

The automobile industry is A)in monopolistic competition because brand names are important B)in monopolistic competition because it has economies of scale C)in monopolistic competition for legal reasons D)an oligopoly because each firm must produce a large amount of output before it can achieve low average costs E)an oligopoly for legal reasons

If a firm must produce a significant share of market output before low average costs can be achieved, the structure of this industry will tend to be A)monopolistic competition B)perfect competition C)oligopoly D)either monopolistic competition or oligopoly E)either perfect competition or monopolistic competition

Which of the following is not an example of an oligopolistic barrier to entry? A)diseconomies of scale B)legal restrictions C)advertising and brand proliferation D)high start-up costs E)control over an essential resource

Oligopolists often sacrifice economies of scale as they expand product variety.

A brand name may contribute to oligopolists' economic profit by A)shifting the demand curve leftward B)shifting the supply curve leftward C)overcoming economies of scale D)acting as a barrier to entry E)reducing advertising costs

The various models of oligopoly explain observed behavior in different industries, but none is satisfactory as a general theory of oligopoly.

Which of the following is an example of an actual cartel? A)the three largest cereal producers in the United States B)General Motors, Ford, and Chrysler C)the Organization of Petroleum Exporting Countries (OPEC) D)the three major U.S.cigarette manufacturers E)U.S.television networks -- ABC, NBC, CBS, and Fox

Collusion is most likely to occur in those oligopolies in which firms have vastly different cost structures.

Cartels are inherently unstable.

Collusion and cartels are frequently legal in Europe.

An oligopolist that cheats on a collusive agreement by reducing price will quickly be forced out of the industry by its competitors.

The incentives for oligopolists to cheat on collusive agreements are strongest during periods of increasing industry sales.

If a cartel can earn a profit, it will increase production as long as A)MR > MC B)MR > ATC C)MC > MR D)MR < AR E)MR > AVC

Two heavy equipment manufacturers might collude in an effort to do all of the following except one.Which is the exception? A)determine a more advantageous price and quantity B)prevent new entry into the market C)take advantage of the legal benefits that U.S.cartels receive D)increase their combined profits E)predict the behavior of other competitors in the heavy equipment market with greater certainty

A cartel's marginal cost curve is the A)highest of all the individual firms' marginal cost curves B)lowest of all the individual firms' marginal cost curves C)horizontal sum of all the individual firms' marginal cost curves D)average of all the individual firms' marginal cost curves E)product of all the individual firms' marginal cost curves

A cartel's profit-maximizing quantity occurs where the cartel's A)marginal cost equals marginal revenue B)marginal cost equals demand C)price is highest D)cost is lowest E)demand curve has a kink

A cartel's profit-maximizing price is A)on the demand curve at the quantity where marginal cost equals marginal revenue B)on the demand curve where it intersects its marginal cost curve C)the highest price possible D)determined by using the cost-plus pricing model E)where the kink in the demand curve occurs

Collusion occurs when A)a firm chooses a level of output to maximize its own profit B)firms get together to maximize joint profits C)firms refuse to follow their price leaders D)firms petition their U.S.senators for favors E)two firms' price and output decisions come into conflict

A cartel is A)a group of oligopolistic firms that engage in formal collusion B)a group of monopolistically competitive firms which charge the same price C)usually legal in the United States D)an agreement among rival firms to set prices independently E)illegal throughout the world

Three firms that are successful in colluding to raise their prices must A)lose profits B)announce any price changes to the government C)restrict output D)increase advertising to earn a profit E)expand production

In a cartel, A)all firms produce the same amount of output and earn the same profit B)all firms produce the same amount of output but earn different amounts of profit because their costs differ C)firms produce different amounts of output but earn the same profit D)firms with higher average cost produce more so that all firms earn the same profit E)firms with lower average cost often earn higher profits

Under which of the following market conditions is it most difficult to maintain a cartel agreement? A)There are many firms in the industry and these firms have similar costs. B)There are many firms in the industry and these firms have different costs. C)There are few firms in the industry and these firms have similar costs. D)There are few firms in the industry and these firms have different costs. E)There are many firms in the industry and these firms produce homogeneous products.

If all six suppliers of cement to Metropolis all agree to establishes a price of $45 per ton, this would be A)a legal contract B)price discrimination C)cost-plus pricing D)a cartel E)beneficial to consumers

The chances of successful collusion are greatest when A)firms are producing a differentiated product B)there are many firms in the industry C)there are tiny firms and huge firms together in the same industry D)demand curves and cost curves are similar among the firms in the industry E)demand is falling

If zinc suppliers are successful in forming an international zinc cartel, they will experience A)lower output and higher prices, which discourage the entry of new firms into the industry B)lower output, higher prices, and the need to organize an effort to prevent the entry of new firms into the industry C)higher output and higher prices, which discourage the entry of new firms into the industry D)higher output, higher prices, and the need to organize an effort to prevent the entry of new firms into the industry E)none of the above

Which of the following helps to make a cartel successful? A)stable demand and costs B)differentiated output C)highly variable cost conditions D)highly variable demand conditions E)rapidly changing technology

An oligopoly model that describes formal collusion is the A)kinked demand curve model B)cartel model C)cost-plus pricing model D)game theory model E)horizontal merger model

A formal agreement among the firms in an industry to coordinate their production and pricing decisions in order to earn monopoly profits is known as A)price discrimination B)the kinked demand curve C)monopolistic competition D)a cartel E)joint competition

Each member of a cartel A)faces a temptation to cheat on the agreement because lowering its price slightly below the established price will usually increase the firm's sales and profit B)faces a temptation to cheat on the agreement because raising its price slightly above the established price will usually increase the firm's sales and profit C)has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually have no impact on the firm's sales and profit D)has no temptation to cheat on the agreement because raising its price slightly above the established price will usually decrease the firm's sales and profit E)has no temptation to cheat on the agreement because lowering its price slightly below the established price will usually lower the firm's sales and profit

A cartel is A)explicit collusion B)a conglomerate merger C)a horizontal merger D)legal in the United States E)implicit collusion

Collusion is easier to achieve and maintain in oligopoly when A)there are many firms in the industry B)the firms' products are homogeneous C)the firms' cost structures are very different D)there are very weak barriers to entry E)the industry is located in the United States

Suppose a firm that sells a variety of athletic shoes is trying to start a pattern of price leadership in its market.Which of the following is not a problem this firm might have to face? A)Rivals recognize the intent of its actions. B)Other firms may not necessarily follow the leader. C)Other firms may not follow the leader but offer better service instead. D)Differentiation among products allows for more variation in price. E)The price leader must keep costs lower than other firms'.

Tacit collusion occurs in industries that A)are monopolistically competitive B)contain price leaders C)experience rapid technological change D)are regulated E)produce very differentiated products

Which of the following does not hinder successful price leadership? A)all of the following are correct B)potentially large economic profits due to this activity C)cheating by offering secret discounts D)product differentiation E)illegality of coordinated pricing

Historically, the U.S.steel industry has been a good example of A)monopolistic competition B)a cartel C)a pure monopoly D)the kinked demand curve model of oligopoly E)the price leadership model of oligopoly

During certain periods in the past few decades, if one of the three major breakfast cereal producers in the United States announced a price increase, the other two announced a similar price increase.This is a good example of A)monopolistic competition B)a cartel C)a pure monopoly D)the kinked demand curve model of oligopoly E)the price leadership model of oligopoly

Cost-plus pricing A)is used only in oligopolistic market structures B)simplifies pricing policy by adding a markup to average total cost C)in actual practice leads to markups which are greater for more elastic demand curves D)is likely to increase profits more than the use of marginal analysis E)requires the firm to project the amount which will be sold and then "mark-up" the price based on average variable cost

Price wars occur more often in monopolistic competition than in other market structures.

A payoff matrix is a table listing the expected economic profit resulting from different possible strategies.

In the game theory model of oligopoly, A)firms will be successful in colluding to raise prices B)one firm raises its prices, and other firms follow suit C)firms will match other firms' price cuts but not their price increases D)firms may attempt to avoid the worst outcome but may achieve a less-than-optimal outcome E)firms never avoid the worst outcome

In game theory, if two rivals in an oligopoly can avoid a large loss by cutting price from $40 to $35, A)neither will cut its price B)one will charge $40 and the other will charge $35 C)their actions will depend on their respective strategies D)each will cut price but not all the way to $35 E)they will collude to do what's best for both of them

One common assumption in game theory is that firms A)try to avoid the worst outcome B)try to achieve the best outcome C)minimize losses D)always cooperate E)always compete

Game theory is a separate model of oligopoly therefore it is of limited value when trying to generally understand firm level behavior

Game theory provides us with a general approach to understanding the behavior of firms when their choices are interdependent

The prisoner's dilemma is applicable only when considering the illegal behavior that firms in a non-competitive market may pursue

A player's strategy is a game plan when decisions are interdependent

Because firms in an oligopoly are interdependent, they attempt to maximize revenues rather than profits

Game theory is most useful in understanding the decision making behavior of firms in which type of industry? A)perfect competition B)monopoly C)monopolistic competition D)natural monopoly E)oligopoly

Game theory focuses on A)strategic behavior among interdependent firms B)professional athletic events C)competition between the players in board games D)competition between those in the political arena and those in the market place E)the interaction between firms in a competitive industry and those in a non-competitive industry

Game theory is used in a number of areas in economics.What is the primary reason that it is used in analyzing oligopoly type market structures? A)The firms are producing a similar product B)The firms are producing differentiated products C)The demand curve facing the oligopolistic firms is perfectly inelastic D)The mutual interdependence of firms in industries with a small number of firms E)The demand curve the oligopolistic firm faces is downward sloping

Game theory is the study of which of the following? A)The prisoner's dilemma B)The behavior of people engaged in recreational games C)The mutual interdependence of firms in oligopolistic industries D)The downward sloping demand curve faced by firms in an oligopoly E)The interaction between marginal and average revenue

The solution of a game is dependent upon A)predicted response of competitors B)the existence of a perfectly inelastic demand curve C)costs of production being constant D)economies of scale in production E)marginal revenue being equal to marginal cost

Which of the following is likely to occur when it is known that a two-person game is to be played only once? A)Collusion B)The demand curve becomes perfectly inelastic for this time period C)The prisoner's dilemma D)The pursuit of profit maximization for the entire industry E)An attempt to equate marginal revenue with marginal cost

A prisoner's dilemma is a situation in which A)a change in marginal cost may not lead to a change in price B)a firm's competitors follow a price increase but ignore a price decrease C)oligopolists behave irrationally D)oligopolists attempt to maximize sales rather than profits E)an oligopolists demand curve may become perfectly inelastic

Which of the following is likely to occur when a two-person game can be played repeatedly? A)Collusion and cooperation among the players B)The prisoner's dilemma C)The industry demand curve will become perfectly elastic D)The industry demand curve will become perfectly inelastic E)There is no solution possible because of the indeterminate price quantity combinations

A prisoner's dilemma can be described as a situation in which A)a decision maker is uncertain about the potential punishment for something done in the past B)an individual decision maker finds it in his best interest to pursue a course of action that can lead to a less than desirable outcome for the group C)producers act so as to avoid maximizing profits because of government retaliation D)individual firms seeks to maximize their own profits with no regard for the group E)the summation of individual demand curves creates an inelastic demand curve facing the industry

The principal advantage of the game theory approach is that it allows us to A)take all possible information into consideration before developing a theory B)better understand why the firm in a competitive industry avoids games C)better understand how the government should regulate a natural monopoly D)better understand decision making when one person's choices affect another person's choices E)understand the relationship between the firm and the industry demand curves

The advantage of game theory is that it allows us to focus on the A)individual firm's incentives to cooperate or not B)relationship between the market and firm level demand curve C)costs and benefits D)government regulators and the firms in an industry E)models where there are no barriers to entry

The term strategy in terms of game theory refers to A)the relationship between price and marginal cost B)the relationship between individual firm demand curves and the market demand curve C)each firm's game plan in making decisions D)the interrelationship between price and marginal revenue E)the tendency for collusive firms to generate normal profits

The payoff matrix refers to A)the difference between total revenue and total cost at different price levels B)a listing of the rewards and penalties associated with pursuing various strategies C)the difference between average and marginal cost for the non-competitive firm D)the difference between average and marginal revenue in a non-competitive industry E)the difference between average variable and average total cost to the firm

The solution in the prisoner's dilemma is called the A)loss minimizing solution B)profit maximizing equilibrium C)dominant-strategy equilibrium D)revenue maximizing equilibrium E)marginal revenue solution

The dominant-strategy solution implies that each firm A)ignores the reactions of competitors B)colludes with competitors to maximize industry profits C)ignores the decisions of the other firms D)takes all potential bits of information into consideration before making a decision E)selects the optimal solution to a game

The prisoner's dilemma provides an explanation for A)the price wars that sometimes occur in oligopolies B)the ability of firms in an oligopoly to extract the entire consumer surplus C)the collusive behavior that sometimes occurs in an oligopoly D)the failure of firms in non-competitive industries to maximize profits E)an irrational behavior that occurs in competitive markets

The tit-for-tat strategy implies that the firms A)in non-competitive industries match price increases but ignore price decreases B)will follow the lead of the dominant firm in making pricing decisions C)prices will change whenever fixed cost changes D)cooperate on the first round, and then follow your competitors reactions on the second round E)price will only change if demand changes

Which oligopoly model was developed to explain price wars in an industry? A)natural oligopolies B)cartels C)price leadership by a dominant firm D)game theory E)cost-plus theory

In a game that can be repeated, the optimal solution is A)dependent upon each firm's decision in the first round of decision making B)independent of the decisions that competitive firms made on the first round C)to maximize profits regardless of what competitors do D)to minimize costs regardless of what competitors do E)to select the solution that minimizes the potential losses from a decision

As a real estate agent, Krista Otavi prides herself on her good training, availability to clients, and hard work to make a sale.Which one of the basic ways of product differentiation does Krista emphasize? A)services B)product image C)location D)commission rate E)physical differences

A greater supply of video rental outlets along with the increased availability of substitutes like cable channels made rental rates A)decrease slightly B)remain unchanged C)crash D)fluctuate wildly up and down E)increase

Which of the following is not a threat to bricks-and-mortar video rental stores? A)on-demand movies delivered by broadband cable B)rental services that deliver DVDs by mail C)digital movies and TV shows available on Wal-Mart's Web site D)None of the answers is a threat. E)All of the answers are threats.

In regards to monopolistic competition, some economists argue that consumers are willing to pay a higher price in order to enjoy a wider selection of goods and services.

If the leading canned soup company introduces dozens of new flavors in order to dominate shelf space, the company is most likely trying to create a barrier to entry by A)increasing the total investment needed to reach the minimum efficient size B)spending more on advertising than potential competitors can afford C)exploiting economies of scale D)crowding out the competition E)establishing an undifferentiated oligopoly

To maximize cartel profit, the members must allocate output so that the marginal cost for the final unit produced by each firm is A)identical B)unequal C)negative D)equal to the firm's average total cost E)maximized

Consensus becomes easier to achieve as the number of firms in a cartel grows

In the prisoner's dilemma game, the sentence that each player receives depends on A)neither strategy chosen B)only the strategy the player chooses C)only the strategy the other player chooses D)the strategy the player chooses and on the strategy the other player chooses E)None of the answers is correct.

In a coordination game, a Nash equilibrium occurs when A)each player ignores the strategy of the other player B)each player chooses no strategy, but maintains the status quo C)each player chooses the same strategy D)one player can improve the outcome by changing strategy E)None of the answers is correct.

If oligopolists engaged in some sort of collusion, industry output would be __________ and the price would be __________ than under perfect competition. A)smaller, lower B)smaller, higher C)smaller, no different D)greater, lower E)greater, higher

Exhibit 10-15 Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not.What strategies will maximize their joint profit? A)Eagle advertise and Dan'l Boone doesn't B)both advertise C)Eagle doesn't advertise and Dan'l Boone does D)neither advertises E)can't tell

Exhibit 10-15 Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not.What strategies will most likely result? A)Eagle advertise and Dan'l Boone doesn't B)both advertise C)Eagle doesn't advertise and Dan'l Boone does D)neither advertises E)can't tell

Exhibit 10-15 Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not.Eagle Tobacco has a dominant strategy.

Exhibit 10-15 Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not.Eagle Tobacco's dominant strategy is not to advertise.

Exhibit 10-15 Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan'l Boone Tobacco with respect to their decisions to advertise or not.Eagle Tobacco and Dan'l Boone Tobacco have the same dominant strategy.

Exhibit 10-16 In Exhibit 10-16, the monopolistic competitor's profit-maximizing level of output is A)1 unit B)2 units C)3 units D)4 units E)5 units

Exhibit 10-16 In Exhibit 10-16, the monopolistic competitor's profit-maximizing price is A)$10 B)$15 C)$20 D)$25 E)$30

Exhibit 10-16 In Exhibit 10-16, the monopolistic competitor will A)lose $10 B)lose $15 C)break even D)earn $25 profit E)earn $30 profit

Exhibit 10-16 Consider the situation depicted for the monopolistically competitive firm in Exhibit 10-16.What would you expect to happen in this market in the long-run? A)exit of resources will occur and this firm's demand curve will shift out leading to a higher price B)exit of resources will occur and this firm's demand curve will shift out leading to a lower price C)nothing will happen the industry is in long-run equilibrium D)entry of new resources will occur and this firm's demand curve will shift in leading to a lower price E)entry of new resources will occur and this firm's demand curve will shift in leading to a higher price

Exhibit 10-17 In Exhibit 10-17, the monopolistic competitor's profit-maximizing level of output is A)1 unit B)2 units C)3 units D)4 units E)5 units

Exhibit 10-17 In Exhibit 10-17, the monopolistic competitor's profit-maximizing price is A)$10 B)$15 C)$20 D)$25 E)$30

Exhibit 10-17 In Exhibit 10-17, the monopolistic competitor will A)lose $10 B)lose $15 C)break even D)earn $25 profit E)earn $30 profit

Exhibit 10-17 Consider the situation depicted for the monopolistically competitive firm in Exhibit 10-17.What would you expect to happen in this market in the long-run? A)exit of resources will occur and this firm's demand curve will shift out leading to a higher price B)exit of resources will occur and this firm's demand curve will shift out leading to a lower price C)nothing will happen the industry is in long-run equilibrium D)entry of new resources will occur and this firm's demand curve will shift in leading to a lower price E)entry of new resources will occur and this firm's demand curve will shift in leading to a higher price

Exhibit 10-18 In Exhibit 10-18, the monopolistic competitor's profit-maximizing level of output is A)1 unit B)2 units C)3 units D)4 units E)5 units

Exhibit 10-18 In Exhibit 10-18, the monopolistic competitor's profit-maximizing price is A)$10 B)$15 C)$20 D)$25 E)$30

Exhibit 10-18 In Exhibit 10-18, the monopolistic competitor will A)lose $10 B)lose $15 C)break even D)earn $25 profit E)earn $30 profit

Exhibit 10-18 Consider the situation depicted for the monopolistically competitive firm in Exhibit 10-18.What would you expect to happen in this market in the long-run? A)exit of resources will occur and this firm's demand curve will shift out leading to a higher price B)exit of resources will occur and this firm's demand curve will shift out leading to a lower price C)nothing will happen the industry is in long-run equilibrium D)entry of new resources will occur and this firm's demand curve will shift in leading to a lower price E)entry of new resources will occur and this firm's demand curve will shift in leading to a higher price