Quiz 15: Monopolistic Competition and Product Differentiation

Which industry is MOST likely to be monopolistically competitive? A)automobile production B)fresh bagel shops C)corn farming D)electric utility production

A monopolistically competitive industry,such as corn snack chips,and a perfectly competitive industry,like wheat farming,are alike in that: A)firms in both types of industries produce identical products. B)firms in both types of industries produce similar but not identical products. C)barriers to entry in both industries are large. D)there are many firms in each industry.

Monopolistic competition is characterized by: A)free entry and exit in the long run. B)each firm producing a standardized product. C)few producers. D)barriers to entry.

In monopolistic competition,each firm: A)is a price taker. B)has some ability to set the price of its differentiated good. C)will set price equal to marginal cost. D)has marginal revenue that is greater than price.

The wedding dress industry is monopolistically competitive.As a result: A)thousands of dress suppliers all sell identical products. B)dresses tend to be differentiated among the many sellers serving this market. C)it has freedom of entry but not exit. D)prices tend to be lower than if the dress industry approximated perfect competition.

Monopolistic competition is similar to perfect competition because firms in both market structures: A)are price takers. B)produce goods that are perfect substitutes. C)find it beneficial to advertise. D)do not face any barriers to entry to the industry in the long run.

In monopolistic competition: A)firms earn zero economic profits in the long run. B)each firm produces a product identical to that of every other firm in the industry. C)firms are aware of their strategic interdependence. D)firms earn large economic profits in the long run.

For the monopolistically competitive wild-caught seafood market,the demand curve for any individual firm is _____,and there are _____ producers of seafood. A)downward sloping;few B)upward sloping;many C)vertical;few D)downward sloping;many

The downward-sloping demand curve for a monopolistically competitive firm: A)reflects product differentiation. B)eventually will become perfectly elastic as more firms enter. C)indicates collusion among firms in the industry. D)ensures that the firm will produce at minimum average cost in the long run.

An industry characterized by many firms producing similar but differentiated products in a market with easy entry and exit is called: A)perfectly competitive. B)monopolistic. C)monopolistically competitive. D)oligopolistic.

An example of monopolistic competition is the _____ industry. A)restaurant B)soft-drink C)automobile D)airline

A(n)_____ market has a single firm and _____,whereas a(n)_____ market has _____ firm(s)and _____. A)oligopolistic;no barriers to entry;monopolistic;many;easy entry and exit B)monopolistic;barriers to entry;monopolistically competitive;many;easy entry and exit C)monopolistic;barriers to entry;oligopolistic;few;no barriers to entry D)monopolistically competitive;barriers to entry;monopolistic;one;barriers to entry

In large shopping malls,the retail clothing market is MOST illustrative of: A)monopolistic competition. B)monopoly. C)perfect competition. D)perfect oligopoly.

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit of firms is: A)a monopoly. B)a duopoly. C)an oligopoly. D)monopolistically competitive.

A monopolistically competitive industry is characterized by a _____ number of firms producing _____ products with _____ entry. A)small;identical;barriers to B)small;similar;relatively easy C)large;similar;relatively easy D)large;identical;relatively easy

Monopolistic competition is an industry structure characterized by: A)a product with no close substitutes. B)a horizontal demand curve. C)a large number of firms. D)barriers to entry and exit.

Because most communities have a large number of similar but not identical substitutes,the market for chiropractors is BEST considered to be: A)an oligopoly. B)perfect competition. C)monopolistically competitive. D)a monopoly.

Because most communities have a large number of similar but not identical substitutes,the market for financial planners is BEST considered to be: A)a monopoly. B)an oligopoly. C)perfect competition. D)monopolistically competitive.

A feature of monopolistic competition that makes it different from monopoly is the: A)fact that firms in monopolistically competitive industries follow the marginal decision rule,while monopolies do not. B)downward-sloping demand curve. C)downward-sloping marginal revenue curve. D)number of firms in the industry.

An industry characterized by many competitors,each producing identical products,with free entry and exit,is described as: A)monopolistically competitive. B)oligopolistic. C)perfectly competitive. D)monopolistic.

Which characteristic is NOT indicative of monopolistic competition? A)product differentiation B)a lack of barriers to entry and exit in the long run C)many competing producers D)tacit collusion

Which feature is shared by monopolistic competition and perfect competition? A)few firms in the industry B)no barriers to entry or exit in the long run C)absolute market power D)standardized products

A common example of monopolistic competition is the market for: A)mandarin oranges. B)cable TV service. C)automobiles. D)gasoline for cars.

An industry with a large number of relatively small firms producing _____ products in a market with easy entry and exit is a(n)_____. A)similar;monopoly B)identical;monopolistic competition C)differentiated;oligopoly D)differentiated;monopolistic competition

Monopolistic competition describes an industry characterized by a _____ number of firms producing _____ products with _____ entry. A)small;identical;barriers to B)small;similar;relatively easy C)large;similar;relatively easy D)large;identical;relatively easy

The market for dentists in most communities can be considered _____ because the market has a large number of similar but not identical dental services. A)monopolistic competition B)a monopoly C)perfect competition D)an oligopoly

Monopolistic competition describes an industry characterized by: A)a product with many close substitutes. B)a horizontal demand curve. C)a small number of firms. D)barriers to entry and exit.

Monopolistic competition is different from monopoly because firms: A)have some power to set prices. B)have a downward-sloping demand curve. C)face some competition. D)have a downward-sloping marginal revenue curve.

Because most communities have a large number of similar but not identical substitutes,the market for florists is BEST considered to be: A)a monopoly. B)an oligopoly. C)monopolistically competitive. D)perfectly competitive.

Monopolistic competition describes an industry characterized by: A)a product with no close substitutes. B)many firms,each with some market power. C)a small number of firms. D)barriers to entry and exit.

An industry with easy entry and exit of a large number of small firms producing a standardized product is: A)in perfect competition. B)in monopolistic competition. C)an oligopoly. D)a monopoly.

Because of the lack of substitutes,the market for a newly developed and freshly patented prescription drug is BEST considered to be: A)in perfect competition. B)in monopolistic competition. C)an oligopoly. D)a monopoly.

An industry with a few interdependent firms is BEST described as being: A)in perfect competition. B)in monopolistic competition. C)an oligopoly. D)a monopoly.

The market for grade A large eggs in California is BEST considered to be an example of: A)perfect competition. B)monopolistic competition. C)oligopoly. D)monopoly.

An industry with a single firm producing a product for which there are no close substitutes and that is protected by barriers to entry is an example of: A)perfect competition. B)monopolistic competition. C)oligopoly. D)monopoly.

The market for soft drinks,which is dominated by Coca Cola and Pepsi,is BEST considered to be an example of: A)perfect competition. B)monopolistic competition. C)oligopoly. D)monopoly.

If the toothpaste market is monopolistically competitive,product differentiation would NOT take the form of: A)production of many varieties of toothpaste,including those with whitening agents. B)differentiation in the locations where certain toothpastes are available. C)quality differences among the various brands. D)setting the price of the product well below the price charged by the rivals.

In many cities you,can stay at a Holiday Inn in the downtown area,in a suburban community,or near the airport.These Holiday Inn establishments are examples of product differentiation by: A)type. B)location. C)quality. D)style.

Many customers will walk right past a diner that serves coffee and go to Starbucks,where they pay more for a cup of java.For these customers,coffee is differentiated by: A)style. B)location. C)quality. D)type.

The sources of product differentiation do NOT include: A)differences in location. B)differences in quality. C)the perception by consumers that products are different,even if they are physically identical. D)consumers' dislike of having options.

Which factor is NOT a source of product differentiation? A)price B)location C)style D)quality

Firms in monopolistic competition can acquire some market power by: A)product differentiation. B)engaging in tacit collusion. C)producing where MR > MC. D)increasing their output to the perfectly competitive level.

When a monopolistically competitive industry earns economic profit,the result of competition among sellers is usually that: A)the price of the product increases to monopoly level. B)the price of the product quickly reaches the perfectly competitive level. C)firms in the industry gain market share. D)firms in the industry lose market share.

Since a monopolistically competitive firm faces a downward-sloping demand curve,its price will be _____ revenue. A)equal to marginal B)less than marginal C)greater than marginal D)equal to total

The demand curve for a firm operating in a monopolistically competitive industry is: A)U-shaped. B)upward sloping. C)downward sloping. D)vertical.

The demand curve for a firm in monopolistic competition is _____ facing a perfectly competitive firm. A)downward sloping,unlike the horizontal demand curve B)horizontal,unlike the downward-sloping demand curve C)horizontal,the same as that D)downward sloping,the same as that

The profit-maximizing rule MC = MR is followed by firms operating in: A)monopolistic competition but not perfect competition. B)perfect competition but not monopolistic competition. C)either monopolistic competition or perfect competition,depending on the costs of production. D)both monopolistic competition and perfect competition.

Product differentiation under monopolistic competition means that each firm: A)charges the same price. B)maximizes profit where MC = P. C)faces a downward-sloping demand curve. D)always receives economic profits.

Product differentiation under monopolistic competition means that each firm: A)charges a slightly different price. B)has a pure monopoly. C)maximizes profit where MC = P. D)faces a horizontal demand curve.

In a monopolistically competitive industry: A)a firm maximizes profits when MR = MC yet P > MC. B)people would be better off if output were reduced. C)output could be increased without an increase in total cost. D)to maximize profits,firms set MR = MC,and people would be better off if output were reduced.

A monopolistically competitive firm has a downward-sloping demand curve for its product,primarily because: A)there are no barriers to entry or exit in the long run. B)there are many sellers in the industry. C)its product is differentiated. D)the price is greater than the marginal revenue.

The demand curve for a firm operating in a monopolistically competitive market is BEST described as: A)U-shaped. B)upward sloping. C)downward sloping. D)horizontal.

The _____ demand curve for a firm operating in a monopolistically competitive market _____ facing a perfectly competitive firm. A)downward-sloping;is the same as the demand curve B)downward-sloping;differs from the horizontal demand curve C)horizontal;differs from the downward-sloping demand curve D)horizontal;is the same as the demand curve

If a monopolistically competitive firm is producing the profit-maximizing level of output and is earning an economic profit in the short run: A)price is less than average total costs. B)price is less than marginal cost. C)marginal revenue is less than marginal cost. D)marginal revenue equals marginal cost.

Suppose a monopolistically competitive firm is making a profit,but it can increase its profits by increasing output.At the current level of output: A)marginal revenue is greater than marginal cost. B)price is less than marginal cost. C)price is less than average total cost. D)marginal revenue is less than marginal cost.

Suppose Susan owns a business that operates in a market characterized by monopolistic competition.Susan's profit-maximizing price is $12,her profit-maximizing output is 900 units per week,and her profits are $1,800 per week.Susan decides that she needs more profits and therefore raises her price to $15.At the new price of $15: A)profits will increase. B)profits will remain at $1,800. C)marginal revenue will be greater than marginal cost. D)marginal revenue will be less than marginal cost.

Suppose a monopolistically competitive firm can increase its profits by decreasing its output.At the current output: A)marginal revenue is less than zero. B)price is less than marginal revenue. C)marginal revenue is less than marginal cost. D)price is less than average total cost.

To maximize profit,a monopolistically competitive firm should produce the level of output at which: A)marginal revenue equals marginal cost. B)price equals marginal cost. C)price equals total cost. D)marginal revenue equals price.

(Figure: Monopolistic Competition)Use Figure: Monopolistic Competition.The firm in the figure is producing at the output level that maximizes profits (minimizes losses).The shaded rectangle depicts the level of: Figure: Monopolistic Competition A)profit. B)loss. C)fixed cost. D)variable cost.

The price for a firm under monopolistic competition is _____ revenue. A)equal to marginal B)greater than marginal C)less than marginal D)greater than total

A firm in monopolistic competition maximizes its profit by producing at a quantity where: A)MC = ATC. B)MC = AR. C)MC = MR. D)MC = P.

If a firm operating in monopolistic competition is producing a quantity that generates MC > MR,then the marginal decision rule tells us that profit: A)can be increased by increasing production. B)can be increased by decreasing production. C)can be increased by decreasing the price. D)is maximized only if MC = P.

If a firm operating in monopolistic competition is producing a quantity that generates MC < MR,then the marginal decision rule tells us that profit: A)can be increased by increasing production. B)can be increased by decreasing production. C)can be increased by increasing the price. D)is maximized only if MC = P.

If a firm operating in monopolistic competition is producing a quantity that generates MC = MR,then the marginal decision rule tells us that profit: A)is maximized. B)can be increased by decreasing production. C)can be increased by decreasing the price. D)is maximized only if MC = P.

Use the following to answer questions 65-66: Figure: Profit Maximization for a Firm in Monopolistic Competition -(Figure: Profit Maximization for a Firm in Monopolistic Competition)Use Figure: Profit Maximization for a Firm in Monopolistic Competition.Suppose that an innovation reduces a firm's costs from ATC to ATC.Before the innovation reduced the cost,the firm's economic profit at the profit-maximizing quantity was: A)$0. B)$30. C)$750. D)$4,500.

Use the following to answer questions 65-66: Figure: Profit Maximization for a Firm in Monopolistic Competition -(Figure: Profit Maximization for a Firm in Monopolistic Competition)Use Figure: Profit Maximization for a Firm in Monopolistic Competition.Suppose that an innovation reduces a firm's costs from ATC to ATC.After the innovation reduces the cost,the firm's economic profit at the new profit-maximizing quantity is: A)$0. B)$30. C)$1,500. D)$3,000.

Use the following to answer questions 65-66: Figure: Profit Maximization for a Firm in Monopolistic Competition -In the short run,a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits.Which expression must be TRUE for this firm? A)MR = MC and P = ATC. B)MR = MC and P > ATC. C)MR > MC and P = ATC. D)P = MR = MC > ATC.

A monopolistically competitive firm is operating in the short run at the optimal level of output and is earning negative economic profits.Which expression must be TRUE for this firm? A)ATC > P > MR = MC. B)ATC = P > MR = MC. C)ATC > P = MR = MC. D)ATC > P > MR > MC.

A gas station operates in a monopolistically competitive market and is in short-run equilibrium.Suppose that a fixed cost for this firm decreases.As a result,the firm's price will _____,the firm's output will _____,and the firm's economic profit will _____. A)increase;increase;increase B)increase;increase;decrease C)stay the same;stay the same;increase D)decrease;stay the same;increase

To maximize profits,a firm in monopolistic competition should produce such that marginal cost: A)equals average total cost. B)is greater than marginal revenue. C)equals marginal revenue. D)equals price.

If a firm operating in monopolistic competition is producing a quantity at which _____,then the marginal decision rule tells us that profit _____. A)MC > MR;can be increased by increasing production B)MC < MR;can be increased by decreasing production C)MC < MR;can be increased by increasing production D)MC > MR;is maximized

If a firm operating in monopolistic competition is producing a quantity at which MC < MR,then profit can be _____ by _____. A)increased;decreasing production B)increased;increasing production C)increased;increasing the price D)maximized;decreasing production

A firm operating in a monopolistically competitive market is producing a quantity at which MC = MR.Profit: A)can be increased by increasing production. B)is maximized. C)can be increased by decreasing the price. D)is maximized only if MC = P.

If a monopolistically competitive firm is in long-run equilibrium,price: A)equals average total cost. B)equals marginal cost. C)equals marginal revenue. D)is greater than average total cost.

In the long run,monopolistically competitive firms: A)produce at the level that minimizes average total cost. B)set marginal revenue equal to price. C)cannot earn an economic profit. D)produce such that marginal cost equals price.

Monopolistically competitive firms have zero economic profits in the long run because of: A)excess capacity. B)price wars among firms. C)easy entry and exit. D)excessive advertising.

Toby operates a small deli downtown.The deli industry is monopolistically competitive.In the long run,Toby will produce where: A)marginal revenue equals marginal cost. B)price equals minimum average total cost. C)price equals marginal cost. D)price equals marginal revenue.

Suppose the dry-cleaning market is monopolistically competitive and economically profitable this year.In the long run,the demand for any one firm's dry-cleaning services will _____ as more firms enter the industry,causing economic profits to _____. A)decrease;become economic losses B)decrease;fall to zero C)not change;fall D)increase;increase

If monopolistically competitive firms are earning positive economic profits in the short run,then in the long run: A)firms will leave the industry. B)the demand curves faced by existing firms will move to the right. C)economic profits will increase. D)economic profits will be reduced to zero.

When a monopolistically competitive firm is making zero economic profits,it is producing so that the average total cost curve is tangent to the demand curve.At this output: A)the firm is maximizing profits,and marginal cost must equal marginal revenue. B)the firm is not maximizing profits,and a slight increase or decrease in output will lead to positive profits. C)since economic profits are zero,the condition that marginal revenue equals marginal cost is irrelevant. D)the condition that marginal revenue equals marginal cost continues to be relevant,but the marginal revenue and marginal cost curves need not intersect directly below the point of tangency between the average total cost curve and the demand curve.

Toby operates a small deli downtown.The deli industry is monopolistically competitive.If some delis leave the industry,Toby's _____ curve will shift to the _____. A)marginal cost;left B)marginal cost;right C)demand;left D)demand;right

In monopolistic competition: A)firms may advertise to increase demand for their product. B)entry of new firms shifts the demand curve for existing firms to the right. C)when some firms exit,the demand curve for the firms that remain in the industry shifts to the left. D)firms earn large economic profits in the long run.

The model of monopolistic competition characterizes the market for plumbing services in a city.Suppose that the market is in long-run equilibrium.For a typical plumbing firm,price: A)equals average total cost. B)exceeds average total cost. C)is less than average total cost. D)is greater than the average for all other firms in the market.

The model of monopolistic competition characterizes the market for plumbing services in a city.This market is initially in long-run equilibrium,but then there is an increase in market demand for plumbing services.We expect that in the long run: A)firms will leave the plumbing market. B)there will be a short-run increase in the number of firms,but then the number will return to the original level. C)new firms will enter the plumbing market. D)firms will shut down,but they will not leave the industry.

In the long run,monopolistically competitive firms tend to have: A)high economic profits. B)zero economic profits. C)negative economic profits. D)substantial economic losses.

In the long run,if a monopolistically competitive firm produces the optimal level of output: A)P = ATC = MR = MC. B)P > ATC > MR = MC. C)P = ATC > MR > MC. D)P = ATC > MR = MC.

(Figure: Possible Long-Run Outcome)Use Figure: Possible Long-Run Outcome.In the figure,which price and quantity refer to a potential long-run profit maximizing outcome for a firm producing in a monopolistically competitive market? Figure: Possible Long-Run Outcome A)P₁ and Q₃ B)P₁ and Q₁ C)P₂ and Q₂ D)P₁ and Q₄

In the short run,a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits.In the long run,the _____ of firms shifts the firm's demand and marginal revenue curves _____,which _____ the firm's level of output and _____ the price it can charge until price equals average total cost. A)entry;leftward,decreases;decreases B)entry;leftward,decreases;increases C)entry;downward,decreases;decreases D)exit;rightward,increases;increases

In a long-run equilibrium,firms in a monopolistically competitive industry sell at a price: A)equal to marginal cost. B)less than marginal cost. C)greater than marginal cost. D)less than marginal revenue.

General Snacks is a typical firm in monopolistic competition.If the market is in long-run equilibrium,then the price General Snacks charges for its snack goods: A)equals average total cost. B)exceeds average total cost. C)is less than average total cost. D)is more than the average for all other firms in the market.

General Snacks is a typical firm in monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the long run,the economic profits of typical firms in the industry will be: A)typical of those earned by monopoly firms. B)positive but less than the level typically earned by monopoly firms. C)zero. D)negative.

In the long run,monopolistically competitive firms: A)always earn high economic profits. B)tend to earn zero economic profits. C)usually incur negative economic profits. D)usually incur substantial economic losses.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)K. B)P. C)N. D)O.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (B)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)Q. B)R. C)S. D)T.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (C)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)U. B)V. C)W. D)X.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (A)of the figure,economic profit per unit is the vertical distance between points: A)K and L. B)L and O. C)M and N. D)N and O.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (C)of the figure,economic loss per unit is the vertical distance between points: A)X and T. B)U and W. C)V and W. D)V and T.

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.A positive economic profit will be earned if the profit-maximizing price is _____ in panel _____. A)F; (A) B)G; (A) C)H; (B) D)I; (C)

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.Zero economic profit will be earned if the profit-maximizing price is _____ in panel _____. A)F; (A) B)G; (A) C)H; (B) D)I; (C)

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.There will be a negative economic profit (or an economic loss)earned at the profit-maximizing price _____ in panel _____. A)G; (A) B)H; (B) C)I; (C) D)J; (C)

Use the following to answer questions 93-101: Figure: Firms in Monopolistic Competition -(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.A long-run equilibrium is illustrated at the profit-maximizing price _____ in panel _____. A)F; (A) B)G; (A) C)H; (B) D)I; (C)

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)G. B)F. C)H. D)C.

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.In panel (B)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)J. B)K. C)L. D)M.

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.In panel (C)of the figure,the profit-maximizing quantity of output is determined by the intersection at point: A)P. B)S. C)R. D)Q.

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.A positive economic profit is earned if the profit-maximizing price is _____ in panel _____. A)E; (B) B)B; (A) C)A; (A) D)N; (C)

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.A zero economic profit is earned if the profit-maximizing price is _____ in panel _____. A)A; (A) B)B; (A) C)N; (C) D)E; (B)

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.A negative economic profit (or economic loss)is earned if the profit-maximizing price is _____ in panel _____. A)E; (B) B)B; (A) C)N; (C) D)O; (C)

Use the following to answer questions 102-108: Figure: Profits in Monopolistic Competition -(Figure: Profits in Monopolistic Competition)Use Figure: Profits in Monopolistic Competition.A long-run equilibrium is illustrated at the profit-maximizing price _____ in panel _____. A)A; (A) B)E; (B) C)B; (A) D)N; (C)

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the restaurant industry.The restaurant shown here will maximize profits at quantity: A)Q₁. B)Q₂. C)Q₃. D)Not enough information is given to answer the question.

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the restaurant market.For the restaurant shown here,the profit-maximizing price is: A)P₁. B)P₂. C)P₃. D)Not enough information is given to answer the question.

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the restaurant market.For the restaurant shown here,the profit per unit is represented by the vertical distance between the points: A)a and e. B)f and d. C)b and f. D)b and d.

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the restaurant market.If the restaurant shown here were to raise its price above the profit-maximizing price,its total revenue would: A)decrease. B)increase. C)not change. D)Not enough information is given to answer the question.

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the market.In the long run: A)restaurants will leave the market. B)restaurants will enter the market. C)restaurants will neither enter nor exit the market. D)Not enough information is given to answer the question.

Use the following to answer questions 109-114: Figure: The Restaurant Market -(Figure: The Restaurant Market)Use Figure: The Restaurant Market.The figure shows curves facing a typical restaurant.Assume that many firms,differentiated products,and easy entry and exit characterize the restaurant market.In long-run equilibrium,the economic profit earned by the typical restaurant in the community will be: A)negative. B)zero. C)equal to the level shown in the figure. D)Not enough information is given to answer the question.

Use the following to answer questions 109-114: Figure: The Restaurant Market -The model of monopolistic competition characterizes a city's market for plumbing services.Suppose that the market is initially in long-run equilibrium,and then overall demand for plumbing services increases.In the short run,the price for plumbing services will _____ and total output in the market will _____. A)fall;fall B)not change;not change C)rise;rise D)rise;fall

Use the following to answer questions 116-120: Figure: The Market for Gas Stations -(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.The figure shows curves facing a typical gas station in a large town.The market is characterized by many firms,differentiated products,easy entry,and easy exit.If the gas station shown here were to raise its price above the profit-maximizing price,the outcome would be _____ in total revenue. A)a reduction B)an increase C)no change D)Not enough information is given to answer the question.

Use the following to answer questions 116-120: Figure: The Market for Gas Stations -(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.The figure shows curves facing a typical gas station in a large town.The market is characterized by many firms,differentiated products,easy entry,and easy exit.If the gas station here is typical,then in the long run,we would expect to observe: A)a few gas stations leaving the market. B)new gas stations entering the market. C)neither entry nor exit. D)many gas stations leaving the market.

Use the following to answer questions 116-120: Figure: The Market for Gas Stations -(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.The figure shows curves facing a typical gas station in a large town.The market is characterized by many firms,differentiated products,easy entry,and easy exit.If the gas station here is typical,prices charged by firms in the market are likely to: A)fall in the long run. B)rise in the long run. C)remain unchanged. D)rise dramatically in the long run.

Use the following to answer questions 116-120: Figure: The Market for Gas Stations -(Figure: The Market for Gas Stations)Use Figure: The Market for Gas Stations.This market is characterized by many firms,differentiated products,easy entry,and easy exit.In long-run equilibrium,the economic profit earned by the typical gas station will be: A)equal to the level shown in the figure. B)negative. C)zero. D)Not enough information is given to answer the question.

Use the following to answer questions 116-120: Figure: The Market for Gas Stations -The model of monopolistic competition characterizes the market for plumbing services.This market is initially in long-run equilibrium,but then there is an increase in the market demand for plumbing services.We expect that in the long run,the economic profits of typical firms will be: A)typical of those earned by monopoly firms. B)negative. C)zero. D)positive but less than the level typically earned by monopoly firms.

General Snacks is a typical firm in a market characterized by monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the short run the price of snacks will _____ and the market output of snacks will _____. A)fall;fall B)remain unchanged;remain unchanged C)rise;fall. D)rise;rise

General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is initially in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that: A)in the long run,new firms will enter the market. B)there will be a short-run increase in the number of firms,but in the long run,the number of firms will return to the original level. C)firms will leave the market in the long run. D)firms will shut down,but they will not leave the industry in the long run.

Use the following to answer questions 124-127: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Panel(s)_____ in the figure show(s)a monopolistic competitor earning a loss in the short run. A)(a) B)(b) C)(c) D)(b)and (c)

Use the following to answer questions 124-127: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor earning a profit in the short run? A)panel (a)only B)panel (b)only C)panel (c)only D)panels (a)and (c)

Use the following to answer questions 124-127: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor producing where price is greater than marginal revenue? A)panel (a)only B)panel (b)only C)panel (c)only D)panels (a), (b),and (c)

Use the following to answer questions 124-127: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor in long-run equilibrium? A)panel (a)only B)panel (b)only C)panel (c)only D)panels (a), (b),and (c)

Use the following to answer questions 128-129: Figure: Monopolistic Competition III -(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.Pat's Pizza Parlor's profit at the profit-maximizing quantity will be: A)$0. B)$350. C)$700. D)$900.

Use the following to answer questions 128-129: Figure: Monopolistic Competition III -(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.In the long run,the demand curve for Pat's Pizza Parlor will shift to the _____ as competitors _____ the market. A)right;enter B)right;leave C)left;enter D)left;leave

Use the following to answer questions 128-129: Figure: Monopolistic Competition III -Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby is producing the quantity that minimizes his average total cost.Assuming that Toby is maximizing profits,his: A)marginal cost is less than his average total cost. B)marginal cost is less than his marginal revenue. C)price equals his average total cost. D)price is more than his average total cost.

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby,along with every other deli in town,is producing the quantity that minimizes average total cost.Assuming the delis are maximizing profits,the: A)number of delis will eventually decrease. B)number of delis will eventually increase. C)delis' prices equal their average total costs. D)delis have excess capacity.

(Figure: Monopolistic Competition IV)Use Figure: Monopolistic Competition IV.The firm in the figure is producing at the output level that maximizes profits (minimizes losses).The shaded rectangle represents the firm's: Figure: Monopolistic Competition IV A)profit. B)loss. C)fixed cost. D)variable cost.

Use the following to answer questions 133-134: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V)Use Figure: Monopolistic Competition V.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____. A)short run;long run;right B)long run;short run;left C)short run;long run;left D)long run;short run;right

Use the following to answer questions 133-134: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V)Use Figure: Monopolistic Competition V.In the figure,in the long run firms will: A)enter this market until all firms earn zero economic profit. B)exit this market until all remaining firms earn zero profit. C)enter this market,leading to excess profit for all the firms. D)exit this market,leading to excess profit for all the remaining firms.

Use the following to answer questions 135-136: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI)Use Figure: Monopolistic Competition VI.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____. A)short run;long run;right B)long run;short run;left C)short run;long run;left D)long run;short run;right

Use the following to answer questions 135-136: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI)Use Figure: Monopolistic Competition VI.In the figure,in the long run firms will: A)enter this market until all firms earn a zero economic profit. B)exit this market until all remaining firms earn a zero economic profit. C)enter this market,leading to excess profit for all of the firms. D)exit this market,leading to excess profit for all of the remaining firms.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing price and quantity are _____ and _____. A)S;M B)P;M C)P;Q D)T;Q

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.A firm in monopolistic competition will maximize profits by producing so that: A)P = MC. B)MR = MC. C)P = MR. D)P - ATC (i.e. ,economic profit per unit)is maximized.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In the short run,a firm in monopolistic competition may earn economic profits.The profits in panel (A)of the figure are: A)P - S. B)(P - S)× M. C)(P - S)× Q. D)(P - T)× Q.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.If other firms see economic profits in the industry,they will enter it,and the demand curve for firms already in the industry will shift to the _____;in the long run,this will result in an economic profit _____ zero and a price _____ ATC. A)right;equal to;equal to B)right;greater than;greater than C)left;less than;less than D)left;equal to;equal to

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In monopolistic competition,long-run equilibrium is characterized by: A)P > MR. B)P < MR. C)P = MR. D)profit maximization,which occurs where P = MR = MC.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (A)of the figure,if the firm raises its price above P,it will _____ customers. A)lose all of its B)still have some C)not lose any D)gain many new

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.When the demand curve for a firm in monopolistic competition shifts,the marginal revenue curve: A)must also shift. B)shifts in the opposite direction. C)will stay the same. D)will shift,but the profit-maximizing quantity will not change.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (B)of the figure,the long-run equilibrium will result in: A)no economic profits. B)no accounting profits. C)a tangency of the ATC curve with the MR curve. D)no economic profits and a tangency of the ATC curve with the MR curve.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (B)of the figure,the profit-maximizing price is P₂ and the ATC curve is tangent to the new demand curve.The portion of the ATC that lies to the right of the tangency and continues down to the intersection of MC with ATC indicates: A)that the firm is incurring an economic loss. B)that the firm is earning an economic profit. C)overutilization. D)excess capacity.

Use the following to answer questions 137-145: Figure: Profit Maximization in Monopolistic Competition -A monopolistically competitive industry has some of the characteristics of perfect competition,including: A)many firms making economic profit in the long run. B)easy entry and exit. C)identical products. D)easy entry and exit and identical products.

Which statement is TRUE? A)For choosing the profit-maximizing quantity,the short-run decision-making process of a firm in perfect competition is the same as that of a firm in monopolistic competition since they produce so that P > MC. B)In the long run in perfect competition,economic profits equal zero,and in monopolistic competition in the long run,economic profits are very large. C)In perfect competition,P = MC,and in monopolistic competition,MR = MC,but P > MC and there is excess capacity. D)In both perfect competition and monopolistic competition,P equals minimum average total cost in the long run.

The price in long-run equilibrium for a monopolistically competitive firm is _____ and output is _____,compared with that of a perfectly competitive firm with an identical production function and cost curves. A)higher;higher B)higher;lower C)lower;higher D)lower;lower

The profit-maximizing rule,expressed as _____,is adhered to by firms operating in _____ markets. A)MC > MR;monopolistically competitive but not perfectly competitive B)MC = MR;both monopolistically competitive and perfectly competitive C)MC > MR;perfectly competitive but not monopolistically competitive D)MC = MR;perfectly competitive but not monopolistically competitive

The failure to produce enough to minimize average total cost is termed: A)economic profits. B)excess capacity. C)advertising. D)excess production.

The main characteristic that distinguishes monopolistic competition from perfect competition is: A)easy entry and exit. B)many firms. C)differentiated products. D)that in perfect competition,to maximize profits,a firm will produce where MR = MC.

Monopolistic competition in an industry results in: A)overutilization of plants. B)chronic excess capacity. C)less advertising than in perfect competition. D)lower prices than in perfect competition.

Long-run equilibrium in perfect competition and in monopolistic competition are similar because in both models,firms _____ in the long run. A)produce at the minimum point of the average total cost curve B)set price equal to marginal cost C)make zero economic profits D)have excess capacity

The broccoli market is perfectly competitive.This means that the price of broccoli is _____ than if the market were monopolistically competitive,and total broccoli output in the market is _____ than if it were monopolistically competitive. A)lower;higher B)lower;lower C)higher;lower D)higher;higher

A monopolistically competitive firm has excess capacity in the long run.This means that it: A)produces less than the output at which average total costs are minimized. B)produces less than the output at which price and marginal cost are equal. C)could produce more by moving to a larger plant. D)doesn't maximize profits.

The restaurant industry is characterized by excess capacity.This means that: A)restaurants are producing more than their profit-maximizing level. B)the profit-maximizing level is less than the level that minimizes average total costs. C)restaurants are producing less than their profit-maximizing level. D)the quantity of restaurant meals supplied exceeds the quantity of restaurant meals demanded.

Firms in the monopolistically competitive movie industry face excess capacity,which means that there are _____ movies than the output at which _____ cost is minimized. A)fewer;marginal B)more;average total C)fewer;average total D)more;marginal

Use the following to answer questions 158-160: Figure: Comparing Long-Run Equilibriums -(Figure: Comparing Long-Run Equilibriums)Use Figure: Comparing Long-Run Equilibriums.Which statement is FALSE? A)The firm in panel (a)produces where price equals marginal cost and average total cost. B)The firm in panel (b)produces where price equals marginal cost. C)The firm in panel (b)produces where price equals average total cost. D)The firm in panel (a)produces where price equals average total cost.

Use the following to answer questions 158-160: Figure: Comparing Long-Run Equilibriums -(Figure: Comparing Long-Run Equilibriums)Use Figure: Comparing Long-Run Equilibriums.Which statement is TRUE? A)Firms in the market structure shown in panel (a)cannot have profits in the long run,but those in panel (b)can. B)Both panels show markets that have few interdependent firms. C)Both panels show markets that produce identical products. D)Both panels show markets that have many firms.

Use the following to answer questions 158-160: Figure: Comparing Long-Run Equilibriums -(Figure: Comparing Long-Run Equilibriums)Use Figure: Comparing Long-Run Equilibriums.Which statement is FALSE? A)Firms in panel (a)cannot have profits in the long run,but those in panel (b)can. B)Both panels show markets in which firms are covering all of their implicit and explicit costs. C)Firms in the market shown in panel (a)produce identical products,whereas those in panel (b)produce similar but differentiated products. D)Both firms show markets that have many firms.

Use the following to answer questions 158-160: Figure: Comparing Long-Run Equilibriums -Monopolistic competition in an industry will result in _____ because firms produce _____. A)overutilization of plants;the minimum-cost output B)less advertising than in perfect competition;the minimum-cost output C)lower prices than in perfect competition;more than the minimum-cost output D)chronic excess capacity;less than the minimum-cost output

When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production,a firm is said to have: A)economic profits. B)excess capacity. C)advertising. D)excess production.

Which statement is TRUE? A)All markets should be oligopolies because that is the most efficient market structure. B)Monopolistic competition results in excess capacity since,in the long run,the point where MR = MC is to the right of the minimum of the ATC curve. C)In monopolistic competition,firms earn large economic profits in the long run. D)In monopolistic competition,firms earn zero economic profits in the long run.

In contrast with perfect competition,in monopolistic competition: A)entry and exit are easy. B)there are many firms. C)products are differentiated. D)a firm will produce where MR = MC in order to maximize profits.

Firm A and firm B have identical cost curves and operate in markets with similar market demand curves.Firm A operates in perfect competition,and firm B operates in monopolistic competition.In the long run,firm A will charge _____ and produce _____ than will firm B. A)less;less B)more;more C)more;less D)less;more

Monopolistically competitive firms produce less than the output at which average total cost is minimized in the long run.As a result,there is: A)irrational capacity. B)excess capacity. C)product differentiation. D)zero economic profit.

The excess capacity in monopolistic competition may be viewed as: A)the cost of product diversity. B)efficient. C)the reason P = MR = MC in monopolistic competition. D)the advantage of monopolistic competition over monopoly.

Because monopolistically competitive firms charge a price that is greater than marginal cost: A)monopolistic competition is efficient. B)monopolistic competition is inefficient. C)the marginal benefit to society of an additional unit of output is below its marginal cost. D)monopolistic competition is inefficient and the marginal benefit to society of an additional unit of output is below its marginal cost.

Which statement is TRUE? A)Monopolistic competition and perfect competition are both inefficient. B)Monopolistic competition is efficient because of product differentiation. C)The inefficiency of monopolistic competition is arguably a small price to pay for the wide range of product choices it offers. D)The inefficiency of monopolistic competition is a result of advertising expenses.

In long-run equilibrium,a firm in monopolistic competition is similar to a monopoly because it: A)earns no economic profit. B)charges a price equal to marginal cost. C)charges a price greater than marginal cost. D)charges a price equal to average total cost.

The problem of wasteful duplication in monopolistic competition is due to: A)excess capacity. B)a lack of physical and human capital. C)barriers to entry. D)the lack of close substitutes for products produced by monopolistically competitive firms.

Excess capacity is a problem in monopolistic competition because,if there were fewer firms in the industry: A)there would be more choices for consumers. B)average total costs would be higher and profits would be lower. C)average total costs would be lower and the prices paid by consumers could be lower. D)there would be less need for government regulation.

Which statement is TRUE of firms in both perfect competition and monopolistic competition? A)The long-run price is equal to marginal revenue,marginal cost,and average total cost. B)Long-run economic profits are equal to zero. C)The long-run level of output is at the point where average total cost is minimized. D)Price is equal to marginal cost,ensuring that the efficient level of output is produced.

In long-run equilibrium in perfect competition,marginal cost is: A)greater than price. B)equal to price. C)less than price. D)related to price but not in a predictable way.

In long-run equilibrium in monopolistic competition,marginal cost is: A)greater than price. B)equal to price. C)less than price. D)related to price but not in a predictable way.

In long-run equilibrium in perfect competition,price is: A)greater than average total cost. B)equal to average total cost at an output below the point where average total cost is minimized. C)equal to average total cost at its minimum. D)equal to average total cost at an output above the point where average total cost is minimized.

In long-run equilibrium in monopolistic competition,price is: A)greater than average total cost. B)equal to average total cost at an output below where average total cost is minimized. C)equal to average total cost at its minimum. D)equal to average total cost at an output above where average total cost is minimized.

Which scenario is likely to provide the LEAST amount of economic usefulness? A)NFL player Peyton Manning is shown throwing a football in a toothpaste commercial. B)An online advertisement is posted at Cars.com for a 2005 Volvo S60 with 60,000 miles,a sunroof,and heated leather seats. C)An actor in a television commercial is describing the benefits and side effects of a new arthritis medication. D)A radio commercial for a local restaurant is announcing special prices during any college football broadcast.

Which advertising slogan provides information to potential buyers? A)"Coffee Palace-Stop and smell the coffee!" B)"Karaoke Maker wants you to just sing it!" C)"Bee's Beachside Restaurant is the only restaurant on the beach for 50 miles." D)"The Happy Hotel wants you to be happy!"

Some economists think that advertising is a waste of resources because: A)rational consumers end up spending too little on brand names. B)consumers may buy things they do not need. C)advertising creates excess capacity. D)advertising leads to lower costs for goods and services.

Monopolistic competitors often hire a celebrity spokesperson to advertise their product.One reason such advertising works is that: A)celebrities are better informed about the relative merits of different products than are the rest of us. B)consumers assume that the celebrity has researched the product and that the claims being made on his or her behalf are true. C)the fact that a firm is willing to pay the large fees associated with celebrity advertising signals to consumers that it is a major company and that it is therefore likely to have a reliable product. D)celebrities encourage other firms to enter the industry.

Budweiser is a widely recognized brand name.During the Super Bowl each year,this beer company has many of the most successful ads.Which statement is TRUE about advertising for Budweiser? A)It is designed to increase the demand for Budweiser. B)It decreases the costs of supplying Budweiser. C)It guarantees customers that Budweiser tastes better than do other beers. D)It is designed to increase excess capacity.

Which statement about advertising is TRUE? A)There is no role for advertising in perfect competition. B)Firms in monopolistic competition and oligopoly use advertising without the expectation of increasing profit. C)Advertising has costs but few if any benefits. D)Advertising is critical in the long run but not the short run.

Critics of advertising argue that it: A)tends to make markets more perfect. B)leads to low-cost mass production. C)results in higher prices to consumers. D)encourages competition through new-product advertising.

Those who are critical of advertising argue that it: A)tends to make markets behave more like perfectly competitive markets. B)leads to a shortage of high-cost,high-quality goods. C)results in higher prices to consumers. D)encourages competition through price comparison.

Defenders of advertising argue that it: A)seeks to persuade,rather than inform,buyers. B)provides education and information about products. C)facilitates the concentration of monopoly power. D)encourages artificial product differentiation.

Advertising is an economically productive activity and NOT a waste of resources because it: A)increases sales. B)can convey information about the product. C)can signal that firms are desperate for customers. D)can decrease the costs of production.

Among the drawbacks of brand names is the fact that they: A)may encourage the consumption of expensive substitutes for generic items. B)provide some assurance of consistency of quality. C)convey information about the nature of the product. D)indicate that the seller is engaged in repeated interaction with its customers.

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.The profit-maximizing output is _____ cases. A)5 B)6 C)7 D)8

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.The profit-maximizing price is: A)$16. B)$3. C)$5. D)$10.

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.At the profit-maximizing output,profit is: A)$9.00. B)$10.00. C)$60.00. D)$7.00.

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.At the profit-maximizing output,profit per unit is: A)$1.17. B)$8.83. C)$10.00. D)$11.75.

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.If the industry were in perfect competition,the profit-maximizing output would be _____ cases. A)6 B)5 C)7 D)8

Use the following to answer questions 189-194: -Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.If the industry were in perfect competition,the profit-maximizing price in the long run would be: A)$10.00. B)$6.50. C)$8.38 D)$8.29

Use the following to answer questions 189-194: -Shops that sell live bait to people in Alabama may be monopolistically competitive if there is product differentiation and differentiation by location.

The hamburger industry has some differentiation and many firms,suggesting that the hamburger industry is more oligopolistic than it is monopolistically competitive.

Gas stations are not monopolistically competitive because everyone knows the gasoline is the same,regardless of where it is purchased.

Tacit collusion is not feasible in monopolistic competition because of the large number of competing firms.

As product differentiation increases,the price elasticity of demand falls and the firm increases its market power.

Monopolistic competition is unique among the four market structures in that it is the only one that is always characterized by product differentiation.

Monopolistic competition is often found in service industries.

Competition limits the price a monopolistically competitive firm can set.

If the Boston doughnut market is monopolistically competitive and the firms are earning short-run profits,consumers in Boston will see less diversity in the doughnuts offered over time.

In monopolistic competition,the primary source of product differentiation is price competition.

The best way for firms in monopolistic competition to gain market power is to engage in tacit collusion.

Firms in monopolistic competition can gain some market power by engaging in product differentiation.

Economics textbooks are an example of product differentiation by type and style.

Competition among sellers in monopolistic competition means that all of the firms in the industry will produce the same product.

The fact that firms in a monopolistically competitive industry are competing for a limited market is called competition among sellers.

Value in diversity refers to the idea that,by providing a variety of differentiated choices,firms in monopolistic competition provide a gain to consumers.

A monopolistically competitive firm will earn maximum profit if it produces at the lowest possible average total cost.

The conditions for profit maximization and the analysis of short-run equilibrium are identical for monopoly and for a monopolistically competitive firm.

Short-run equilibrium in monopolistic competition differs from that of monopoly because the monopolistic competitor can make losses in the short run,while in a monopoly,profits will always be zero or positive.

Toby operates a small deli in a monopolistically competitive restaurant industry.In long-run equilibrium,the profit-maximizing price of the three-meat sandwich is $3.Price also equals his average total cost.Toby's minimum average total cost is less than $3.

In long-run equilibrium,monopolistic competitors produce at the minimum point on the average total cost curve.

A monopolistically competitive firm may have positive or negative profits in the short run but will have zero profits in the long run.

Firms in monopolistic competition and in perfect competition have excess capacity.

Since a monopolistically competitive firm has the same long-run profits as a perfectly competitive firm,both types of industries are efficient.

Since a monopolistic competitor charges a price higher than marginal cost,there is a deadweight loss associated with monopolistic competition.

All advertising is clearly a waste of resources.

Only irrational consumers are affected by advertising.

Advertising is more likely to occur in perfect competition than in monopolistic competition.

A wheat farmer is more likely to advertise than is a restaurant that sells fast food hamburgers.

Only firms with some market power will gain from individually advertising their product.

A brand name may be valuable because it differentiates a company's products in the minds of consumers.

Relying on brand names will always lead consumers to the best consumption choices if they buy the brand name,rather than a cheaper substitute.

Brand names offer some assurance that the seller has a reputation to protect and hopes to be engaged in repeated transactions with its customers.

A brand name is owned by a particular firm,and it distinguishes that firm's products from those of its competitors.

Industries that are made up of many competing producers,each selling a differentiated product,and whose firms earn zero economic profits in the long run are: A)perfectly competitive. B)monopolies. C)oligopolies. D)monopolistically competitive.

Monopolistic competitors: A)have some ability to set price. B)must accept the price as given and therefore are price takers. C)produce goods that are standardized and hard to differentiate. D)eventually produce at their minimum ATC at the profit-maximizing level.

Monopolistic competitors sell products that are _____ substitutes,and as a result,each firm has a _____ demand curve. A)imperfect;downward-sloping B)perfect;horizontal C)imperfect;horizontal D)perfect;downward-sloping

Use the following to answer question 242: Figure: Monopolistic Competitor -(Figure: Monopolistic Competitor)Use Figure: Monopolistic Competitor.If the firm shown in the figure maximizes its returns,it will: A)earn a positive economic profit. B)break even. C)incur a loss. D)incur a loss equal to its MR.

Use the following to answer question 242: Figure: Monopolistic Competitor -Consumers' differing tastes are one reason monopolistic: A)firms encounter large barriers to entry. B)competitors earn a positive economic profit in the long run. C)competitors set price at MC. D)competitors are similar to monopolists.

In the long run,monopolistic competitors will: A)earn zero economic profits. B)produce at the minimum of their ATC curves. C)set price where MC = MR. D)collude with other firms.

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,what is the fixed cost for this firm? Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20. A)There is none since this is the long run. B)Fixed costs equal $160. C)Fixed costs equal $20. D)Fixed costs equal $180.

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,what is the profit-maximizing level of output for this firm in the short run? Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20. A)160 units B)20 units C)35 units D)180 units

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,what is the profit-maximizing price for this firm in the short run? Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20. A)$160 B)$125 C)$40 D)$180

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,in the short run,this firm: Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20. A)earns profits of $2,430. B)incurs losses of $2,450. C)earns no profit. D)incurs losses of $20.

(Scenario: Monopolistically Competitive Firm)Use Scenario: Monopolistically Competitive Firm.Given the information in the scenario,in the long run,this firm can expect that: Scenario: Monopolistically Competitive Firm For a monopolistically competitive firm,the demand curve is given by Q = 160 - P,and the firm's cost functions are: MC = 20 + 2Q and TC = 20Q + Q² + 20. A)its demand curve will become more elastic as it dominates the market more. B)its economic profits will decrease to zero. C)its losses will fall and eventually become a positive economic profit. D)other firms will not enter or exit the industry.

Monopolistically competitive firms: A)engage in collusive activity to maximize profit. B)are very similar to perfect competitors in producing at the minimum ATC. C)earn a positive economic profit if price is greater than ATC. D)will set price where MC > MR.

In the long run,perfect competitors and monopolistic competitors are similar in that they: A)set price where MR < MC. B)produce an output level at which P = ATC. C)produce a product that is standardized and hard to differentiate. D)earn a positive economic profit.

Both monopolists and monopolistic competitors: A)make positive economic profits in the long run. B)have high barriers to entry. C)charge a price that is greater than the marginal cost of production. D)produce a product for which there are no substitutes.

Perfect competitors and monopolistic competitors both earn _____ economic profit in the long run,but perfect competitors produce at the _____ of the ATC curve,while monopolistic competitors produce _____ of the ATC curve. A)zero;minimum point;on the downward-sloping portion B)positive;minimum point;on the upward-sloping portion C)negative;minimum point;at the minimum point D)zero;downward-sloping portion;at the minimum point

A monopolistic competitor will advertise to: A)reduce excess capacity. B)increase demand for its product. C)collude more effectively with other firms. D)produce on the upward-sloping portion of its ATC curve.

Use the following to answer questions 255-256: Figure: Monopolistic Competitor -(Figure: Monopolistic Competitor)Use Figure: Monopolistic Competitor.The firm shown in the figure may engage in advertising because: A)it does not know any better. B)its price is greater than its MC. C)its profits are negative. D)this will decrease its excess capacity levels.

Use the following to answer questions 255-256: Figure: Monopolistic Competitor -(Figure: Monopolistic Competitor)Use Figure: Monopolistic Competitor.If the firm shown in the figure produces at its profit-maximizing level,it will produce: A)with excess capacity since its P is greater than MR. B)without excess capacity since P is greater than ATC. C)with excess capacity since that output level is on the downward-sloping portion of the ATC curve. D)without excess capacity since that output level is on the downward-sloping portion of the MR curve.