Question 1

Figure 16-5
 
-Refer to Figure 16-5.Which of the graphs depicts a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   None of the above is correct.E) A) and B)
F) C) and D)

Question 2

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-4.What is this firm's profit maximizing level of output?

Accepted Answer

A)   0 units of output
B)   1 unit of output
C)   2 units of output
D)   3 units of outputE) B) and D)
F) B) and C)

Question 3

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses,Benham found that

Accepted Answer

A)   the average price paid for eyeglasses was nearly 20% higher in the states that did not restrict advertising.
B)   the average price paid for eyeglasses was nearly 20% lower in the states that did not restrict advertising.
C)   there was no difference in the average price paid between states that restricted advertising and those that did not.
D)   the average price paid for eyeglasses was almost 5 times higher in the states that did not restrict advertising.E) B) and D)
F) B) and C)

Question 4

If firms in a particular market similar or sell identical products,then the market is
(i) perfectly competitive.
(ii) monopolistically competitive.
(iii) an oligopoly.

Accepted Answer

A)   (i)  or (ii)  only
B)   (ii)  or (iii)  only
C)   (i)  or (iii)  only
D)   (i)  onlyE) All of the above
F) B) and C)

Question 5

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Accepted Answer

A)   increase the elasticity of demand for differentiated products.
B)   enhance competition and encourage more product diversity.
C)   reduce competition and reduce social welfare.
D)   encourage the consumption of all homogenous goods.E) B) and C)
F) A) and B)

Question 6

Firms that sell highly differentiated consumer goods,such as soft drinks,breakfast cereals,and dog food,typically spend what percent of their revenues on advertising?

Accepted Answer

A)   0-1
B)   2-4
C)   10-20
D)   over 50E) All of the above
F) C) and D)

Question 7

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Accepted Answer

A)   industrial products.
B)   homogeneous products.
C)   consumer goods for which there are no close substitutes.
D)   highly-differentiated consumer goods.E) A) and B)
F) A) and C)

Question 8

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Accepted Answer

A) True 
 B)False

Question 9

A firm can signal the high quality of its product by

Accepted Answer

A)   spending nothing on advertising to convey that the product is so good that the firm does not even need to advertise.
B)   spending a large amount of money on advertising.
C)   getting a patent for the product.
D)   not worrying about getting a patent for the product.E) B) and C)
F) A) and C)

Question 10

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Accepted Answer

Recognizable brand names signal quality ...

Question 11

Advertisements that appear to convey no information at all

Accepted Answer

A)   are usually associated with "infomercials."
B)   are useless to consumers but valuable to firms.
C)   are useless to firms but valuable to consumers for their entertainment quality alone.
D)   may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise.E) All of the above
F) A) and B)

Question 12

Among the following situations,which one is least likely to apply to a monopolistically competitive firm?

Accepted Answer

A)   profit is positive in the short run
B)   total cost exceeds total revenue in the short run
C)   profit is positive in the long run
D)   total revenue equals total cost in the long runE) A) and B)
F) None of the above

Question 13

Figure 16-7
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms.
 
-Refer to Figure 16-7.Panel (d) illustrates the change that would occur if existing firms faced

Accepted Answer

A)   long-run economic losses.
B)   a decrease in the diversity of products offered in the market.
C)   new entrants in the market.
D)   firms exiting the market.E) None of the above
F) B) and C)

Question 14

A monopolistically competitive firm

Accepted Answer

A)   charges a price that is equal to marginal cost.
B)   experiences a zero profit in the long run.
C)   produces at the efficient scale in the long run.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 15

One way in which monopolistic competition differs from oligopoly is that

Accepted Answer

A)   there are no barriers to entry in oligopolies.
B)   in oligopoly markets there are only a few sellers.
C)   all firms in an oligopoly eventually earn zero economic profits.
D)   strategic interactions between firms are rare in oligopolies.E) A) and B)
F) A) and C)

Question 16

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Accepted Answer

A) True 
 B)False

Question 17

Edward Chamberlin argued that brand names

Accepted Answer

A)   hampered market efficiency.
B)   were instrumental in enhancing market efficiency.
C)   were useful in enhancing market efficiency when the government enforced the use of exclusive trademarks.
D)   were likely to be more socially efficient when used in conjunction with advertising.E) C) and D)
F) All of the above

Question 18

In the short run,a firm operating in a monopolistically competitive market can earn

Accepted Answer

A)   positive economic profits.
B)   economic losses.
C)   zero economic profits.
D)   All of the above are possible.E) All of the above
F) B) and C)

Question 19

Figure 16-8
The figure is drawn for a monopolistically-competitive firm.
 
-Refer to Figure 16-8.In order to maximize its profit,the firm will choose to produce

Accepted Answer

A)   100 units of output, and its profit will be positive.
B)   100 units of output, and its profit will be zero.
C)   133.33 units of output, and its profit will be negative.
D)   133.33 units of output, and its profit will be zero.E) A) and B)
F) A) and C)

Question 20

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm experience zero economic profit?

Accepted Answer

A)   perfect competition only
B)   perfect competition and monopolistic competition only
C)   perfect competition, monopolistic competition, and monopoly
D)   The answer cannot be determined without knowing whether the market is in the long run or short run.E) None of the above
F) A) and C)

Exam 16: Monopolistic Competition.

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Correct Answer
verified

Firms that sell highly differentiated consumer goods,such as soft drinks,breakfast cereals,and dog food,typically spend what percent of their revenues on advertising?

Correct Answer
verified

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct Answer
verified

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.In order to maximize its profit,the firm will choose to produce

Correct Answer
verified

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Correct Answer
verified
Recognizable brand names signal quality ...
View Answer

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.What is this firm's profit maximizing level of output?

Correct Answer
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Advertisements that appear to convey no information at all

Correct Answer
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Figure 16-5 -Refer to Figure 16-5.Which of the graphs depicts a monopolistically competitive firm in long-run equilibrium?

Correct Answer
verified

If firms in a particular market similar or sell identical products,then the market is (i) perfectly competitive. (ii) monopolistically competitive. (iii) an oligopoly.

Correct Answer
verified

Correct Answer
verified

In the short run,a firm operating in a monopolistically competitive market can earn

Correct Answer
verified

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Correct Answer
verified

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Correct Answer
verified

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm experience zero economic profit?

Correct Answer
verified

Edward Chamberlin argued that brand names

Correct Answer
verified

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses,Benham found that

Correct Answer
verified

A monopolistically competitive firm

Correct Answer
verified

A firm can signal the high quality of its product by

Correct Answer
verified

Among the following situations,which one is least likely to apply to a monopolistically competitive firm?

Correct Answer
verified

One way in which monopolistic competition differs from oligopoly is that

Correct Answer
verified

Exam 16: Monopolistic Competition.

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Correct AnswerverifiedShow Answer

Firms that sell highly differentiated consumer goods,such as soft drinks,breakfast cereals,and dog food,typically spend what percent of their revenues on advertising?

Correct AnswerverifiedShow Answer

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct AnswerverifiedShow Answer

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.In order to maximize its profit,the firm will choose to produce

Correct AnswerverifiedShow Answer

Discuss how brand names may enhance the efficiency of markets in a less developed country.

Correct AnswerverifiedRecognizable brand names signal quality ...View AnswerShow Answer

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.What is this firm's profit maximizing level of output?

Correct AnswerverifiedShow Answer

Advertisements that appear to convey no information at all

Correct AnswerverifiedShow Answer

Figure 16-5 -Refer to Figure 16-5.Which of the graphs depicts a monopolistically competitive firm in long-run equilibrium?

Correct AnswerverifiedShow Answer

If firms in a particular market similar or sell identical products,then the market is (i) perfectly competitive. (ii) monopolistically competitive. (iii) an oligopoly.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the short run,a firm operating in a monopolistically competitive market can earn

Correct AnswerverifiedShow Answer

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Correct AnswerverifiedShow Answer

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Correct AnswerverifiedShow Answer

Consider monopoly,monopolistic competition,and perfect competition.In which of these three market structures does a profit-maximizing firm experience zero economic profit?

Correct AnswerverifiedShow Answer

Edward Chamberlin argued that brand names

Correct AnswerverifiedShow Answer

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses,Benham found that

Correct AnswerverifiedShow Answer

A monopolistically competitive firm

Correct AnswerverifiedShow Answer

A firm can signal the high quality of its product by

Correct AnswerverifiedShow Answer

Among the following situations,which one is least likely to apply to a monopolistically competitive firm?

Correct AnswerverifiedShow Answer

One way in which monopolistic competition differs from oligopoly is that

Correct AnswerverifiedShow Answer

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Correct Answer
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Recognizable brand names signal quality ...
View Answer

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