Question 1

-Refer to the above figure.The above figure shows the cost structure of a firm producing an information product.Which curve would represent the average variable cost?

Accepted Answer

A)  Curve 1
B)  Curve 2
C)  Curve 3
D)  none of the aboveE) A) and B)
F) All of the above

Question 2

What did Harvard economist Edward Chamberlain say about the observation that a monopolistically competitive firm's average cost of production exceeds its minimum average total cost?

Accepted Answer

A)  Chamberlain argued that these higher costs represent the wastefulness of this market structure.
B)  Chamberlain argued that this belief is incorrect.In his view,monopolistically competitive firms do not produce at a cost above their minimum average total costs.
C)  According to Chamberlain,this cost difference represents the value consumers place on variety and having more choice.
D)  In Chamberlain's view,this is evidence that monopolistic competition uses society's resources inefficiently and in a fashion that merits government intervention.E) B) and C)
F) A) and D)

Question 3

-Refer to the above figure.Which panels represent long run equilibrium for the perfectly competitive firm and monopolistic competitive firm,respectively?

Accepted Answer

A)  Panel C & Panel A.
B)  Panel C & Panel B.
C)  Panel B & Panel C.
D)  Panel C & Panel D.E) A) and C)
F) None of the above B

Question 4

The demand curve for a monopolistically competitive firm is

Accepted Answer

A)  more elastic than for a perfectly competitive firm.
B)  more elastic than for a monopoly firm.
C)  more inelastic than for a monopoly firm.
D)  the same elasticity as a perfectly competitive firm.E) A) and D)
F) A) and B)

Question 5

For a firm that sells an information product,the long-run equilibrium exists at a point where

Accepted Answer

A)  price equals average total cost.
B)  price equals average variable cost.
C)  price equals average fixed cost.
D)  price equals marginal cost.E) None of the above
F) A) and B)

Question 6

When a pharmaceutical company advertises that its allergy medication is clinically proven to alleviate hay fever symptoms,the pharmaceutical company is engaging in

Accepted Answer

A)  informational advertising.
B)  trademark protection.
C)  persuasive advertising.
D)  direct marketing.E) A) and C)
F) A) and B) A

Question 7

-Refer to the above figure.Economic profits for this firm are

Accepted Answer

A)  negative.
B)  zero.
C)  positive.
D)  undetermined without more information.E) All of the above
F) B) and C)

Question 8

According to Edward Chamberlin,is the "differentness" of products a waste of resources? Explain.

Accepted Answer

According to Chamberlin,the "differentne...

Question 9

-Use the above figure.For this monopolistic competitor,which of the following is INCORRECT?

Accepted Answer

A)  The profit-maximizing rate of output is qe,and the profit-maximizing price is P.
B)  The demand curve shows a direct relationship between price and quantity demanded.
C)  The profit-maximizing rate of output is at E,where MR intersects MC.
D)  A downward sloping marginal revenue curve that is below the demand curve.E) A) and D)
F) B) and C)

Question 10

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

Accepted Answer

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

Question 11

All of the following are assumptions of monopolistic competition EXCEPT

Accepted Answer

A)  many buyers and sellers.
B)  homogeneous product.
C)  easy entry of new firms in the long run.
D)  profit-maximizing behavior.E) A) and B)
F) A) and C)

Question 12

Mass marketing is

Accepted Answer

A)  advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders.
B)  advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio.
C)  advertising targeted at specific consumers.
D)  advertising intended to reach as many consumers as possible.E) None of the above
F) A) and C)

Question 13

Which of the following is most likely to be a monopolistically competitive firm?

Accepted Answer

A)  Smart phone producer
B)  Cell phone service provider
C)  College textbook publisher
D)  Computer software makerE) B) and C)
F) C) and D)

Question 14

If firms in a monopolistically competitive industry are operating with economic losses,over time we would see

Accepted Answer

A)  firms alter their advertising rates until they made at least normal profits.
B)  some firms exiting the industry,causing the market supply curve to shift to the left,raising price.
C)  some firms exiting the industry,causing the demand curves of the remaining firms to shift to the right.
D)  the firms working together to increase price and everyone's profitability.E) All of the above
F) C) and D)

Question 15

Which of the following statements about a monopolistically competitive firm is FALSE?

Accepted Answer

A)  It tries to differentiate its product from that of competitors.
B)  It may earn short-run economic profits.
C)  It produces the quantity at which MC=MR.
D)  It sets price like a perfectly competitive firm.E) A) and B)
F) C) and D)

Question 16

The goal of advertising is to

Accepted Answer

A)  increase the price elasticity of demand for the firm's product.
B)  reduce the price elasticity of demand for the firm's product.
C)  increase the standardization of the industry.
D)  encourage firms to enter into the industry.E) A) and C)
F) A) and B)

Question 17

Interactive marketing is

Accepted Answer

A)  advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders.
B)  advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio.
C)  advertising targeted at specific consumers.
D)  advertising intended to reach as many consumers as possible.E) A) and D)
F) B) and D) A

Question 18

Compared with a firm in a perfectly competitive market,the demand curve faced by a monopolistically competitive firm is

Accepted Answer

A)  more elastic.
B)  more inelastic.
C)  perfectly elastic.
D)  perfectly inelastic.E) C) and D)
F) None of the above

Question 19

A monopolistic competitor is like a monopolist in the long run in that when economic profits are

Accepted Answer

A)  equal to zero,positive economic profits are made.
B)  equal to zero,economic profits are made.
C)  greater than zero,changes in output are due to changes to plants by existing firms and there is no entry.
D)  greater than zero,price exceeds marginal cost.E) All of the above
F) A) and D)

Question 20

The key feature of monopolistic competition is

Accepted Answer

A)  interdependence of the firms.
B)  lack of advertisement.
C)  product differentiation.
D)  the small number of firms in the industry.E) A) and B)
F) A) and C)

Exam 12: Monopolistic Competition

-Refer to the above figure.The above figure shows the cost structure of a firm producing an information product.Which curve would represent the average variable cost?

Correct AnswerverifiedShow Answer

What did Harvard economist Edward Chamberlain say about the observation that a monopolistically competitive firm's average cost of production exceeds its minimum average total cost?

Correct AnswerverifiedShow Answer

-Refer to the above figure.Which panels represent long run equilibrium for the perfectly competitive firm and monopolistic competitive firm,respectively?

Correct AnswerverifiedB

The demand curve for a monopolistically competitive firm is

Correct AnswerverifiedShow Answer

For a firm that sells an information product,the long-run equilibrium exists at a point where

Correct AnswerverifiedShow Answer

When a pharmaceutical company advertises that its allergy medication is clinically proven to alleviate hay fever symptoms,the pharmaceutical company is engaging in

Correct AnswerverifiedA

-Refer to the above figure.Economic profits for this firm are

Correct AnswerverifiedShow Answer

According to Edward Chamberlin,is the "differentness" of products a waste of resources? Explain.

Correct AnswerverifiedAccording to Chamberlin,the "differentne...View AnswerShow Answer

-Use the above figure.For this monopolistic competitor,which of the following is INCORRECT?

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

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All of the following are assumptions of monopolistic competition EXCEPT

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Mass marketing is

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Which of the following is most likely to be a monopolistically competitive firm?

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If firms in a monopolistically competitive industry are operating with economic losses,over time we would see

Correct AnswerverifiedShow Answer

Which of the following statements about a monopolistically competitive firm is FALSE?

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The goal of advertising is to

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Interactive marketing is

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Compared with a firm in a perfectly competitive market,the demand curve faced by a monopolistically competitive firm is

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A monopolistic competitor is like a monopolist in the long run in that when economic profits are

Correct AnswerverifiedShow Answer

The key feature of monopolistic competition is

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A

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According to Chamberlin,the "differentne...
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A

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