Question 1

(Consider This)  In Wendyâ€™s 1987 commercial depicting a Soviet fashion show, one objective was to portray McDonaldâ€™s and Burger King products as

Accepted Answer

A)   all the same and not very appealing.
B)   produced inefficiently.
C)   unpredictable in terms of features and quality.
D)   only appealing to old women.E) B) and C)
F) C) and D)

Question 2

Monopolistically competitive firms are similar to monopolies in that they have

Accepted Answer

A)   high barriers to entry in their industry.
B)   close substitutes for their products.
C)   inelastic demand for their products.
D)   marginal revenues that are less than price.E) A) and D)
F) A) and C)

Question 3

One difference between monopolistic competition and pure competition is that

Accepted Answer

A)   products may be homogeneous in monopolistic competition.
B)   there is some control over price in monopolistic competition.
C)   monopolistic competition has significant barriers to entry.
D)   firms differentiate their products in pure competition.E) None of the above
F) All of the above

Question 4

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

Accepted Answer

A)   the likelihood of collusion.
B)   high entry barriers.
C)   product differentiation.
D)   mutual interdependence in decision making.E) A) and D)
F) B) and C)

Question 5

Product variety is likely to be greater in

Accepted Answer

A)   monopolistic competition than in pure competition.
B)   pure competition than in monopolistic competition.
C)   homogeneous oligopoly than in monopolistic competition.
D)   homogeneous oligopoly than in differentiated oligopoly.E) A) and B)
F) A) and C)

Question 6

Monopolistically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves.

Accepted Answer

A) True 
 B)False

Question 7

In the long run, the economic profits for a monopolistically competitive firm will be

Accepted Answer

A)   the same as the profits for a monopolist.
B)   slightly less than the profits of a monopolist.
C)   the same as the profits for a purely competitive firm.
D)   slightly more than the profits of a purely competitive firm.E) A) and D)
F) A) and C)

Question 8

An industry having a four-firm concentration ratio of 30 percent

Accepted Answer

A)   approximates pure competition.
B)   is an oligopoly.
C)   is a pure monopoly.
D)   is monopolistically competitive.E) All of the above
F) C) and D)

Question 9

The monopolistically competitive seller maximizes profits by equating price and marginal cost.

Accepted Answer

A) True 
 B)False

Question 10

Monopolistically competitive firms have some control over the price of their products.

Accepted Answer

A) True 
 B)False

Question 11

Nonprice competition refers to

Accepted Answer

A)   competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts.
B)   price increases by a firm that are ignored by its rivals.
C)   advertising, product promotion, and changes in the real or perceived characteristics of a product.
D)   reductions in production costs that are not reflected in price reductions.E) B) and C)
F) A) and B)

Question 12

Other things equal, if more firms enter a monopolistically competitive industry,

Accepted Answer

A)   the demand curves facing existing firms would shift to the right.
B)   the demand curves facing existing firms would shift to the left.
C)   the demand curves facing existing firms would become less elastic.
D)   losses would necessarily occur.E) B) and C)
F) A) and D)

Question 13

The graph depicts a monopolistically competitive firm.  This monopolistically competitive firm is earning economic profits in the short run and

Accepted Answer

A)   will continue to have economic profits in the long run.
B)   will earn only normal profits in the long run.
C)   this will cause its demand curve to shift to the right in the long run.
D)   this will cause its cost curves to rise in the long run.E) None of the above
F) All of the above

Question 14

Which of the following forces does not play a major part in the adjustments of a monopolistically competitive industry toward its long-run equilibrium?

Accepted Answer

A)   profits/losses making firms enter or exit the industry
B)   firms expanding or shrinking their productive capacity
C)   introduction of new products and patents
D)   shifts in the demand curves of individual firms as the industry expands or contractsE) None of the above
F) A) and D)

Question 15

(Consider This)  Which of the following statements is most accurate about the difference between goods produced under the old central planning model of the Soviet Union versus those produced by American capitalism?

Accepted Answer

A)   Soviet markets were purely competitive, while U.S. markets were more monopolistically competitive.
B)   Soviet production employed mass production techniques, while American capitalism did not.
C)   Soviet production put greater emphasis on efficiency, while American capitalism allowed for much more product differentiation.
D)   Product differentiation in the Soviet Union was carefully integrated into the central plan, while differentiation in American capitalism occurs haphazardly and with little forethought.E) B) and C)
F) A) and D)

Question 16

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

Accepted Answer

A)   reduce product price.
B)   increase the level of output.
C)   decrease the level of output.
D)   make no change in the level of output.E) A) and B)
F) None of the above

Question 17

In a monopolistically competitive market like restaurants, large capital-intensive firms like McDonaldâ€™s may co-exist with more labor-intensive mom-and-pop shops. In this case, higher labor costs would tend to favor the survival of

Accepted Answer

A)   large-scale capital-intensive firms more than the small firms.
B)   small firms more than the large-scale capital-intensive firms.
C)   foreign firms more than the large-scale capital-intensive firms.
D)   domestic restaurant firms more than the foreign firms.E) A) and B)
F) B) and D)

Question 18

Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion.   \quad \quad \quad \quad      Cost Data 	ext { Cost Data } Cost Data        \quad \quad \quad     Demand Data 	ext { Demand Data } Demand Data   
  Total  Output  Total  Cost  Quantity  Demanded  Price 0$250$601401552452503553454704405905356115630\begin{array}{|c|c|c|c}\begin{array}{c}	ext { Total } \	ext { Output }\end{array} & \begin{array}{c}	ext { Total } \	ext { Cost }\end{array} & \begin{array}{c}	ext { Quantity } \	ext { Demanded }\end{array} & 	ext { Price } \\hline 0 & \$ 25 & 0 & \$ 60 \\hline 1 & 40 & 1 & 55 \\hline 2 & 45 & 2 & 50 \\hline 3 & 55 & 3 & 45 \\hline 4 & 70 & 4 & 40 \\hline 5 & 90 & 5 & 35 \\hline 6 & 115 & 6 & 30 \\hline\end{array} Total  Output ​0123456​ Total  Cost ​$254045557090115​ Quantity  Demanded ​0123456​ Price $60555045403530​​  What will the maximum total profits be?

Accepted Answer

A)   $65
B)   $85
C)   $90
D)   $110 E) A) and B)
F) A) and C)

Question 19

Which industry would be best characterized as monopolistically competitive?

Accepted Answer

A)   smartphone manufacturing
B)   Internet-search sites
C)   web design consulting
D)   business cloud-computing servicesE) All of the above
F) None of the above

Question 20

In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits

Accepted Answer

A)   must be less than ATC.
B)   must be more than ATC.
C)   may be either equal to ATC, less than ATC, or more than ATC.
D)   will be equal to ATC.E) A) and B)
F) B) and C)

Exam 13: Monopolistic Competition

An industry having a four-firm concentration ratio of 30 percent

Correct Answer
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In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits

Correct Answer
verified

In the long run, the economic profits for a monopolistically competitive firm will be

Correct Answer
verified

Monopolistically competitive firms are similar to monopolies in that they have

Correct Answer
verified

Correct Answer
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Other things equal, if more firms enter a monopolistically competitive industry,

Correct Answer
verified

Which industry would be best characterized as monopolistically competitive?

Correct Answer
verified

The monopolistically competitive seller maximizes profits by equating price and marginal cost.

Correct Answer
verified

(Consider This) In Wendyâ€™s 1987 commercial depicting a Soviet fashion show, one objective was to portray McDonaldâ€™s and Burger King products as

Correct Answer
verified

Monopolistically competitive firms have some control over the price of their products.

Correct Answer
verified

(Consider This) Which of the following statements is most accurate about the difference between goods produced under the old central planning model of the Soviet Union versus those produced by American capitalism?

Correct Answer
verified

Monopolistically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves.

Correct Answer
verified

Nonprice competition refers to

Correct Answer
verified

Product variety is likely to be greater in

Correct Answer
verified

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

Correct Answer
verified

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

Correct Answer
verified

Which of the following forces does not play a major part in the adjustments of a monopolistically competitive industry toward its long-run equilibrium?

Correct Answer
verified

In a monopolistically competitive market like restaurants, large capital-intensive firms like McDonaldâ€™s may co-exist with more labor-intensive mom-and-pop shops. In this case, higher labor costs would tend to favor the survival of

Correct Answer
verified

One difference between monopolistic competition and pure competition is that

Correct Answer
verified

The graph depicts a monopolistically competitive firm. This monopolistically competitive firm is earning economic profits in the short run and

Correct Answer
verified

Exam 13: Monopolistic Competition

An industry having a four-firm concentration ratio of 30 percent

Correct AnswerverifiedShow Answer

In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits

Correct AnswerverifiedShow Answer

In the long run, the economic profits for a monopolistically competitive firm will be

Correct AnswerverifiedShow Answer

Monopolistically competitive firms are similar to monopolies in that they have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things equal, if more firms enter a monopolistically competitive industry,

Correct AnswerverifiedShow Answer

Which industry would be best characterized as monopolistically competitive?

Correct AnswerverifiedShow Answer

The monopolistically competitive seller maximizes profits by equating price and marginal cost.

Correct AnswerverifiedShow Answer

(Consider This) In Wendyâ€™s 1987 commercial depicting a Soviet fashion show, one objective was to portray McDonaldâ€™s and Burger King products as

Correct AnswerverifiedShow Answer

Monopolistically competitive firms have some control over the price of their products.

Correct AnswerverifiedShow Answer

(Consider This) Which of the following statements is most accurate about the difference between goods produced under the old central planning model of the Soviet Union versus those produced by American capitalism?

Correct AnswerverifiedShow Answer

Monopolistically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves.

Correct AnswerverifiedShow Answer

Nonprice competition refers to

Correct AnswerverifiedShow Answer

Product variety is likely to be greater in

Correct AnswerverifiedShow Answer

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

Correct AnswerverifiedShow Answer

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

Correct AnswerverifiedShow Answer

Which of the following forces does not play a major part in the adjustments of a monopolistically competitive industry toward its long-run equilibrium?

Correct AnswerverifiedShow Answer

In a monopolistically competitive market like restaurants, large capital-intensive firms like McDonaldâ€™s may co-exist with more labor-intensive mom-and-pop shops. In this case, higher labor costs would tend to favor the survival of

Correct AnswerverifiedShow Answer

One difference between monopolistic competition and pure competition is that

Correct AnswerverifiedShow Answer

The graph depicts a monopolistically competitive firm. This monopolistically competitive firm is earning economic profits in the short run and

Correct AnswerverifiedShow Answer

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