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Deck 14: Monopolistic Competition
ملء الشاشة (f)
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Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition will charge a price of
A)$15 a unit.
B)$25 a unit.
C)$20 a unit.
D)$32 a unit.
E)$35 a unit.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition will charge a price of
A)$15 a unit.
B)$25 a unit.
C)$20 a unit.
D)$32 a unit.
E)$35 a unit.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,it will produce an output level
A)of 40 units.
B)of 60 units.
C)of 80 units.
D)that is impossible to determine without information concerning the rival firms.
E)that is less than 40 units.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,it will produce an output level
A)of 40 units.
B)of 60 units.
C)of 80 units.
D)that is impossible to determine without information concerning the rival firms.
E)that is less than 40 units.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$40;100
B)$90;220
C)$80;200
D)$55;140
E)$70;100
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$40;100
B)$90;220
C)$80;200
D)$55;140
E)$70;100
سؤال
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry.
B)all firms will exit the industry.
C)economic profit of all firms in the industry is zero.
D)it produces 60 units of output to maximize economic profit.
E)the firm's profits can be expected to rise over time.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry.
B)all firms will exit the industry.
C)economic profit of all firms in the industry is zero.
D)it produces 60 units of output to maximize economic profit.
E)the firm's profits can be expected to rise over time.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produces the efficient quantity,it
A)makes an economic profit.
B)makes zero economic profit.
C)incurs an economic loss.
D)is in a long-run equilibrium.
E)will face competition from new firms entering the industry.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produces the efficient quantity,it
A)makes an economic profit.
B)makes zero economic profit.
C)incurs an economic loss.
D)is in a long-run equilibrium.
E)will face competition from new firms entering the industry.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)its profit will rise over time.
D)this firm will exit the industry in the long run.
E)none of the above.
Figure 14.2.2
Refer to Figure 14.2.2.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)its profit will rise over time.
D)this firm will exit the industry in the long run.
E)none of the above.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Which demand curve does this monopolistically competitive firm face in the long run?
A)demand curve D1
B)demand curve D2
C)either demand curve D1 or D2
D)neither demand curve D1 nor demand curve D2
E)Any demand curve is possible, including D1 or D2.
Figure 14.2.3
Refer to Figure 14.2.3.Which demand curve does this monopolistically competitive firm face in the long run?
A)demand curve D1
B)demand curve D2
C)either demand curve D1 or D2
D)neither demand curve D1 nor demand curve D2
E)Any demand curve is possible, including D1 or D2.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)is not in a long-run equilibrium.
E)is producing at its efficient scale.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)is not in a long-run equilibrium.
E)is producing at its efficient scale.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition produces an output
A)of 40 units.
B)of 70 units.
C)of 60 units.
D)that cannot be determined without information concerning rival firms.
E)of less than 40 units.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition produces an output
A)of 40 units.
B)of 70 units.
C)of 60 units.
D)that cannot be determined without information concerning rival firms.
E)of less than 40 units.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.When the firm produces the efficient quantity,it produces
A)100 units.
B)140 units.
C)200 units.
D)220 units.
E)250 units.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.When the firm produces the efficient quantity,it produces
A)100 units.
B)140 units.
C)200 units.
D)220 units.
E)250 units.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,then it will charge a price
A)of $20 a unit.
B)of $50 a unit.
C)of $40 a unit.
D)of $30 a unit.
E)that is impossible to determine without information concerning the behaviour of the rival firms.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,then it will charge a price
A)of $20 a unit.
B)of $50 a unit.
C)of $40 a unit.
D)of $30 a unit.
E)that is impossible to determine without information concerning the behaviour of the rival firms.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)the market is efficient.
D)this firm will exit the industry in the long run.
E)its profit will rise over time.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)the market is efficient.
D)this firm will exit the industry in the long run.
E)its profit will rise over time.
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Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.This firm
A)is incurring an economic loss.
B)is in long-run equilibrium.
C)is making an economic profit.
D)must raise its price to maximize economic profit.
E)will make more economic profit in the long run.
Figure 14.2.2
Refer to Figure 14.2.2.This firm
A)is incurring an economic loss.
B)is in long-run equilibrium.
C)is making an economic profit.
D)must raise its price to maximize economic profit.
E)will make more economic profit in the long run.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)it is producing the efficient quantity.
D)the number of firms in the industry will remain constant.
E)economic profit will fall over time.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)it is producing the efficient quantity.
D)the number of firms in the industry will remain constant.
E)economic profit will fall over time.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.This firm in monopolistic competition will
A)make an economic profit in the short run.
B)make zero economic profit in the short run.
C)incur an economic loss.
D)make an economic profit in the long run.
E)incur an economic loss in the long run.
Figure 14.2.1
Refer to Figure 14.2.1.This firm in monopolistic competition will
A)make an economic profit in the short run.
B)make zero economic profit in the short run.
C)incur an economic loss.
D)make an economic profit in the long run.
E)incur an economic loss in the long run.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produced the efficient quantity,it would produce
A)100 units.
B)220 units.
C)200 units.
D)250 units.
E)140 units.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produced the efficient quantity,it would produce
A)100 units.
B)220 units.
C)200 units.
D)250 units.
E)140 units.
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Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)makes less economic profit than that earned by firms in perfect competition.
E)makes an unknown economic profit that is impossible to determine without information concerning the price charged by the rival firms.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)makes less economic profit than that earned by firms in perfect competition.
E)makes an unknown economic profit that is impossible to determine without information concerning the price charged by the rival firms.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$100;200
B)$90;220
C)$80;200
D)$70;100
E)$55;140
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$100;200
B)$90;220
C)$80;200
D)$70;100
E)$55;140
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Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.In the long run,
A)new firms enter, and each existing firm's demand curve shifts leftward.
B)new firms enter, and each existing firm's demand curve shifts rightward.
C)existing firms exit, and each remaining firm's demand curve shifts leftward.
D)existing firms exit, and each remaining firm's demand curve shifts rightward.
E)the equilibrium is the same as in the short run.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.In the long run,
A)new firms enter, and each existing firm's demand curve shifts leftward.
B)new firms enter, and each existing firm's demand curve shifts rightward.
C)existing firms exit, and each remaining firm's demand curve shifts leftward.
D)existing firms exit, and each remaining firm's demand curve shifts rightward.
E)the equilibrium is the same as in the short run.
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Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What price does the firm charge?
A)P2
B)P1
C)P4
D)P3
E)P5
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What price does the firm charge?
A)P2
B)P1
C)P4
D)P3
E)P5
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Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What is the firm's level of output?
A)Q1
B)Q2
C)Q3
D)Q4
E)zero.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What is the firm's level of output?
A)Q1
B)Q2
C)Q3
D)Q4
E)zero.
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Use the figure below to answer the following questions.
Figure 14.2.6
In the long-run,a firm in monopolistic competition produces at an output level where
A)P > ATC and MR = MC.
B)P > ATC and MR > MC.
C)P = ATC and MR = MC.
D)P = ATC and MR > MC.
E)P > ATC and MC > ATC.
Figure 14.2.6
In the long-run,a firm in monopolistic competition produces at an output level where
A)P > ATC and MR = MC.
B)P > ATC and MR > MC.
C)P = ATC and MR = MC.
D)P = ATC and MR > MC.
E)P > ATC and MC > ATC.
سؤال
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Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it charges ________ per jacket.
A)$100
B)$95
C)$75
D)$120
E)$90
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it charges ________ per jacket.
A)$100
B)$95
C)$75
D)$120
E)$90
سؤال
Use the figure below to answer the following questions.
Figure 14.2.5
Refer to Figure 14.2.5.The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.
A)zero
B)$2
C)$4
D)$6
E)$10
Figure 14.2.5
Refer to Figure 14.2.5.The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.
A)zero
B)$2
C)$4
D)$6
E)$10
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Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.
A)loss;$8,000
B)loss;$13,000
C)profit;$7,200
D)profit;$13,000
E)loss;$8,960
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.
A)loss;$8,000
B)loss;$13,000
C)profit;$7,200
D)profit;$13,000
E)loss;$8,960
سؤال
Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it sells ________ jackets per day.
A)200
B)240
C)275
D)140
E)280
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it sells ________ jackets per day.
A)200
B)240
C)275
D)140
E)280
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Use the figure below to answer the following questions.
Figure 14.2.5
Refer to Figure 14.2.5 The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?
A)zero
B)between $1 and $700
C)between $701 and $900
D)more than $901
E)less than zero
Figure 14.2.5
Refer to Figure 14.2.5 The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?
A)zero
B)between $1 and $700
C)between $701 and $900
D)more than $901
E)less than zero
سؤال
Use the figure below to answer the following question.
Figure 14.2.7
Refer to Figure 14.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of
A)4 units.
B)8 units.
C)16 units.
D)$10.
E)$5.
Figure 14.2.7
Refer to Figure 14.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of
A)4 units.
B)8 units.
C)16 units.
D)$10.
E)$5.
سؤال
Use the figure below to answer the following questions.
Figure 14.2.6
Consider a monopolistically competitive industry which is in long-run equilibrium.Which of the following is true?
A)All firms charge a price equal to average total cost.
B)All firms charge a price equal to marginal cost.
C)All firms make an economic profit.
D)The demand, average total cost, and marginal cost curves all intersect at the same point.
E)Firms have an incentive to enter the industry.
Figure 14.2.6
Consider a monopolistically competitive industry which is in long-run equilibrium.Which of the following is true?
A)All firms charge a price equal to average total cost.
B)All firms charge a price equal to marginal cost.
C)All firms make an economic profit.
D)The demand, average total cost, and marginal cost curves all intersect at the same point.
E)Firms have an incentive to enter the industry.
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ملء الشاشة (f)
Deck 14: Monopolistic Competition
1
If some firms in the industry make an economic profit,then
A)the industry cannot be perfectly competitive.
B)the industry must be monopolistically competitive.
C)rival firms will enter if there are no barriers to entry.
D)the firms must practice product differentiation.
E)the industry must be an oligopoly.
A)the industry cannot be perfectly competitive.
B)the industry must be monopolistically competitive.
C)rival firms will enter if there are no barriers to entry.
D)the firms must practice product differentiation.
E)the industry must be an oligopoly.
rival firms will enter if there are no barriers to entry.
2
The key feature of monopolistic competition that distinguishes it from perfect competition is
A)many sellers.
B)barriers to entry.
C)perfectly elastic demand.
D)product differentiation.
E)none of the above.
A)many sellers.
B)barriers to entry.
C)perfectly elastic demand.
D)product differentiation.
E)none of the above.
product differentiation.
3
Monopolistic competition differs from monopoly because in monopolistic competition
A)firms maximize profits.
B)firms set marginal revenue equal to marginal cost to maximize profit.
C)firms are free to enter and exit.
D)All of the above are differences between monopoly and monopolistically competitive firms.
E)None of the above are differences between monopoly and monopolistically competitive firms.
A)firms maximize profits.
B)firms set marginal revenue equal to marginal cost to maximize profit.
C)firms are free to enter and exit.
D)All of the above are differences between monopoly and monopolistically competitive firms.
E)None of the above are differences between monopoly and monopolistically competitive firms.
firms are free to enter and exit.
4
When comparing perfect competition and monopolistic competition,we find that
A)firms in monopolistic competition produce identical products just as do firms in perfect competition.
B)firms in monopolistic competition face barriers to entry, unlike firms in perfect competition.
C)advertising plays a large role in monopolistic competition, unlike in perfect competition.
D)firms in monopolistic competition are price takers just as is the case for firms in perfect competition.
E)firms in monopolistic competition each have a large market share.
A)firms in monopolistic competition produce identical products just as do firms in perfect competition.
B)firms in monopolistic competition face barriers to entry, unlike firms in perfect competition.
C)advertising plays a large role in monopolistic competition, unlike in perfect competition.
D)firms in monopolistic competition are price takers just as is the case for firms in perfect competition.
E)firms in monopolistic competition each have a large market share.
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5
ACME,Inc.operates in a market structure in which there are many other firms that find it easy to enter or exit.ACME is operating in ________ market.
A)definitely a perfectly competitive
B)a perfectly competitive or a monopolistically competitive
C)definitely a monopolistically competitive
D)neither a perfectly competitive nor a monopolistically competitive
E)a monopolistic
A)definitely a perfectly competitive
B)a perfectly competitive or a monopolistically competitive
C)definitely a monopolistically competitive
D)neither a perfectly competitive nor a monopolistically competitive
E)a monopolistic
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6
Product differentiation exists within an industry when
A)there are no substitutes for the product.
B)the firm can sell all it wants at the given price.
C)the market is a monopoly.
D)the market is perfectly competitive.
E)there are close but not perfect substitutes for the product.
A)there are no substitutes for the product.
B)the firm can sell all it wants at the given price.
C)the market is a monopoly.
D)the market is perfectly competitive.
E)there are close but not perfect substitutes for the product.
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7
Which of the following goods is best described as being sold in a monopolistically competitive market?
A)batteries
B)wheat
C)fast food
D)postage stamps
E)the local newspaper
A)batteries
B)wheat
C)fast food
D)postage stamps
E)the local newspaper
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8
One factor that distinguishes a monopoly from monopolistic competition is that
A)firms in monopolistic competition practice collusion.
B)no barriers to entry exist in a monopoly.
C)barriers to exit exist in monopolistic competition.
D)close substitutes are available in monopolistic competition.
E)firms are price-takers in monopolistic competition.
A)firms in monopolistic competition practice collusion.
B)no barriers to entry exist in a monopoly.
C)barriers to exit exist in monopolistic competition.
D)close substitutes are available in monopolistic competition.
E)firms are price-takers in monopolistic competition.
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9
In monopolistic competition,each firm supplies a ________ part of the total industry output and its actions ________ the actions of the other firms.
A)small;do not directly affect
B)small;directly affect
C)large;do not directly affect
D)large;directly affect
E)large;may or may not directly affect
A)small;do not directly affect
B)small;directly affect
C)large;do not directly affect
D)large;directly affect
E)large;may or may not directly affect
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10
In monopolistic competition
A)firms practice product differentiation.
B)the goods produced by each firm are identical.
C)firms do not have any control over the price of their products.
D)there are barriers to entry.
E)a small number of firms compete.
A)firms practice product differentiation.
B)the goods produced by each firm are identical.
C)firms do not have any control over the price of their products.
D)there are barriers to entry.
E)a small number of firms compete.
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11
A monopolistically competitive firm is able to influence the price of what it sells because of
A)barriers to entry.
B)economies of scale.
C)product differentiation.
D)the fact there are many buyers.
E)inelastic demand.
A)barriers to entry.
B)economies of scale.
C)product differentiation.
D)the fact there are many buyers.
E)inelastic demand.
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12
In monopolistic competition
A)firms can collude.
B)each firm has a small market share.
C)each firm pays attention to every other firm.
D)firms make a profit in the long run.
E)all of the above.
A)firms can collude.
B)each firm has a small market share.
C)each firm pays attention to every other firm.
D)firms make a profit in the long run.
E)all of the above.
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13
A firm in a monopolistically competitive market
A)faces an upward-sloping demand curve.
B)faces a downward-sloping demand curve.
C)practices product differentiation.
D)faces a horizontal demand curve.
E)B and C are correct.
A)faces an upward-sloping demand curve.
B)faces a downward-sloping demand curve.
C)practices product differentiation.
D)faces a horizontal demand curve.
E)B and C are correct.
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14
Within a monopolistically competitive industry,
A)firms can freely enter and exit, and economic profit is zero in the long run.
B)firms can freely enter and exit, and economic profit is greater than zero in the long run.
C)there are some barriers to entry and exit, and economic profit is zero in the long run.
D)there are some barriers to entry and exit, and economic profit is greater than zero in the long run.
E)firms can freely enter and exit, and economic profit is zero in the short run.
A)firms can freely enter and exit, and economic profit is zero in the long run.
B)firms can freely enter and exit, and economic profit is greater than zero in the long run.
C)there are some barriers to entry and exit, and economic profit is zero in the long run.
D)there are some barriers to entry and exit, and economic profit is greater than zero in the long run.
E)firms can freely enter and exit, and economic profit is zero in the short run.
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15
The existence of a large number of firms in monopolistic competition
A)means that each firm has a small market share.
B)makes it possible for each firm's price to deviate by a large amount from the average price of the other firms.
C)means that a firm must pay attention to the behaviour of all of its competitors.
D)All of the above answers are correct.
E)None of the above answers are correct.
A)means that each firm has a small market share.
B)makes it possible for each firm's price to deviate by a large amount from the average price of the other firms.
C)means that a firm must pay attention to the behaviour of all of its competitors.
D)All of the above answers are correct.
E)None of the above answers are correct.
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16
In monopolistic competition
A)there are two firms in the market.
B)the size of one firm is small relative to the size of the industry.
C)the size of one firm is large relative to the size of the industry.
D)each firm is a price-taker.
E)there is only one firm in the market.
A)there are two firms in the market.
B)the size of one firm is small relative to the size of the industry.
C)the size of one firm is large relative to the size of the industry.
D)each firm is a price-taker.
E)there is only one firm in the market.
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17
Which of the following best explains why firms in monopolistic competition face a downward- sloping demand curve while perfectly competitive firms do not?
A)Monopolistically competitive industries have only a few firms.
B)Monopolistically competitive firms face barriers to entry.
C)Only industries with free entry and exit have firms that face horizontal demand curves.
D)Firms in monopolistic competition are price takers.
E)Firms in monopolistic competition sell a differentiated good.
A)Monopolistically competitive industries have only a few firms.
B)Monopolistically competitive firms face barriers to entry.
C)Only industries with free entry and exit have firms that face horizontal demand curves.
D)Firms in monopolistic competition are price takers.
E)Firms in monopolistic competition sell a differentiated good.
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18
Toronto has a large number of retail stores that sell clothes.Each store has its own characteristics which differ from the other stores.The clothing business in Toronto is an example of
A)a duopoly.
B)an oligopoly.
C)a perfectly competitive market.
D)a monopoly.
E)a monopolistically competitive market.
A)a duopoly.
B)an oligopoly.
C)a perfectly competitive market.
D)a monopoly.
E)a monopolistically competitive market.
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19
Dole Co.operates in a monopolistically competitive market.Which of the following characterizes Dole Co.'s market?
A)Dole Co.supplies a small portion of the market's output.
B)Dole Co.'s product is slightly different from its competitors.
C)Dole Co.faced no barrier to entry when it decided to enter its market.
D)Dole Co.is unable to collude with other firms in the market.
E)All of the above describe Dole Co.'s market.
A)Dole Co.supplies a small portion of the market's output.
B)Dole Co.'s product is slightly different from its competitors.
C)Dole Co.faced no barrier to entry when it decided to enter its market.
D)Dole Co.is unable to collude with other firms in the market.
E)All of the above describe Dole Co.'s market.
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20
In monopolistic competition,firms compete on the basis of
A)price only.
B)price, quality, and marketing.
C)marketing only.
D)quality and marketing, but not price.
E)quality only.
A)price only.
B)price, quality, and marketing.
C)marketing only.
D)quality and marketing, but not price.
E)quality only.
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21
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition will charge a price of
A)$15 a unit.
B)$25 a unit.
C)$20 a unit.
D)$32 a unit.
E)$35 a unit.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition will charge a price of
A)$15 a unit.
B)$25 a unit.
C)$20 a unit.
D)$32 a unit.
E)$35 a unit.
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22
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,it will produce an output level
A)of 40 units.
B)of 60 units.
C)of 80 units.
D)that is impossible to determine without information concerning the rival firms.
E)that is less than 40 units.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,it will produce an output level
A)of 40 units.
B)of 60 units.
C)of 80 units.
D)that is impossible to determine without information concerning the rival firms.
E)that is less than 40 units.
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23
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$40;100
B)$90;220
C)$80;200
D)$55;140
E)$70;100
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$40;100
B)$90;220
C)$80;200
D)$55;140
E)$70;100
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24
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry.
B)all firms will exit the industry.
C)economic profit of all firms in the industry is zero.
D)it produces 60 units of output to maximize economic profit.
E)the firm's profits can be expected to rise over time.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry.
B)all firms will exit the industry.
C)economic profit of all firms in the industry is zero.
D)it produces 60 units of output to maximize economic profit.
E)the firm's profits can be expected to rise over time.
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25
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produces the efficient quantity,it
A)makes an economic profit.
B)makes zero economic profit.
C)incurs an economic loss.
D)is in a long-run equilibrium.
E)will face competition from new firms entering the industry.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produces the efficient quantity,it
A)makes an economic profit.
B)makes zero economic profit.
C)incurs an economic loss.
D)is in a long-run equilibrium.
E)will face competition from new firms entering the industry.
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26
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)its profit will rise over time.
D)this firm will exit the industry in the long run.
E)none of the above.
Figure 14.2.2
Refer to Figure 14.2.2.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)its profit will rise over time.
D)this firm will exit the industry in the long run.
E)none of the above.
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27
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Which demand curve does this monopolistically competitive firm face in the long run?
A)demand curve D1
B)demand curve D2
C)either demand curve D1 or D2
D)neither demand curve D1 nor demand curve D2
E)Any demand curve is possible, including D1 or D2.
Figure 14.2.3
Refer to Figure 14.2.3.Which demand curve does this monopolistically competitive firm face in the long run?
A)demand curve D1
B)demand curve D2
C)either demand curve D1 or D2
D)neither demand curve D1 nor demand curve D2
E)Any demand curve is possible, including D1 or D2.
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28
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)is not in a long-run equilibrium.
E)is producing at its efficient scale.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)is not in a long-run equilibrium.
E)is producing at its efficient scale.
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29
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition produces an output
A)of 40 units.
B)of 70 units.
C)of 60 units.
D)that cannot be determined without information concerning rival firms.
E)of less than 40 units.
Figure 14.2.2
Refer to Figure 14.2.2.To maximize economic profit,this firm in monopolistic competition produces an output
A)of 40 units.
B)of 70 units.
C)of 60 units.
D)that cannot be determined without information concerning rival firms.
E)of less than 40 units.
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30
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.When the firm produces the efficient quantity,it produces
A)100 units.
B)140 units.
C)200 units.
D)220 units.
E)250 units.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.When the firm produces the efficient quantity,it produces
A)100 units.
B)140 units.
C)200 units.
D)220 units.
E)250 units.
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31
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,then it will charge a price
A)of $20 a unit.
B)of $50 a unit.
C)of $40 a unit.
D)of $30 a unit.
E)that is impossible to determine without information concerning the behaviour of the rival firms.
Figure 14.2.1
Refer to Figure 14.2.1.If this firm is in monopolistic competition,then it will charge a price
A)of $20 a unit.
B)of $50 a unit.
C)of $40 a unit.
D)of $30 a unit.
E)that is impossible to determine without information concerning the behaviour of the rival firms.
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32
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)the market is efficient.
D)this firm will exit the industry in the long run.
E)its profit will rise over time.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)the market is efficient.
D)this firm will exit the industry in the long run.
E)its profit will rise over time.
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33
In the long run,all firms in an industry that is monopolistically competitive
A)produce at their efficient scale.
B)set price equal to marginal cost.
C)incur an economic profit.
D)make an economic profit.
E)make zero economic profit.
A)produce at their efficient scale.
B)set price equal to marginal cost.
C)incur an economic profit.
D)make an economic profit.
E)make zero economic profit.
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34
Use the figure below to answer the following questions.
Figure 14.2.2
Refer to Figure 14.2.2.This firm
A)is incurring an economic loss.
B)is in long-run equilibrium.
C)is making an economic profit.
D)must raise its price to maximize economic profit.
E)will make more economic profit in the long run.
Figure 14.2.2
Refer to Figure 14.2.2.This firm
A)is incurring an economic loss.
B)is in long-run equilibrium.
C)is making an economic profit.
D)must raise its price to maximize economic profit.
E)will make more economic profit in the long run.
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35
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)it is producing the efficient quantity.
D)the number of firms in the industry will remain constant.
E)economic profit will fall over time.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)it is producing the efficient quantity.
D)the number of firms in the industry will remain constant.
E)economic profit will fall over time.
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36
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1.This firm in monopolistic competition will
A)make an economic profit in the short run.
B)make zero economic profit in the short run.
C)incur an economic loss.
D)make an economic profit in the long run.
E)incur an economic loss in the long run.
Figure 14.2.1
Refer to Figure 14.2.1.This firm in monopolistic competition will
A)make an economic profit in the short run.
B)make zero economic profit in the short run.
C)incur an economic loss.
D)make an economic profit in the long run.
E)incur an economic loss in the long run.
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37
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produced the efficient quantity,it would produce
A)100 units.
B)220 units.
C)200 units.
D)250 units.
E)140 units.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.If the firm produced the efficient quantity,it would produce
A)100 units.
B)220 units.
C)200 units.
D)250 units.
E)140 units.
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38
Firefox,Internet Explorer,and Google Chrome browsers are an example of
A)goods produced in perfectly competitive markets.
B)goods produced by monopolies.
C)product differentiation.
D)goods that are identical.
E)product similarity.
A)goods produced in perfectly competitive markets.
B)goods produced by monopolies.
C)product differentiation.
D)goods that are identical.
E)product similarity.
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39
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)makes less economic profit than that earned by firms in perfect competition.
E)makes an unknown economic profit that is impossible to determine without information concerning the price charged by the rival firms.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.At the profit-maximizing output level,the firm
A)incurs an economic loss.
B)makes zero economic profit.
C)makes an economic profit.
D)makes less economic profit than that earned by firms in perfect competition.
E)makes an unknown economic profit that is impossible to determine without information concerning the price charged by the rival firms.
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40
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$100;200
B)$90;220
C)$80;200
D)$70;100
E)$55;140
Figure 14.2.3
Refer to Figure 14.2.3.Assume this firm faces demand curve D?.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.
A)$100;200
B)$90;220
C)$80;200
D)$70;100
E)$55;140
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41
In the short-run,the similarity between a monopolist and a monopolistically competitive firm is that
A)they both make the same decisions about the level of output and output price.
B)they both face an upward-sloping supply curve for their products.
C)they both try to maximize their total revenues.
D)they both try to minimize their average fixed costs.
E)they set the price such that marginal revenue equals average total cost.
A)they both make the same decisions about the level of output and output price.
B)they both face an upward-sloping supply curve for their products.
C)they both try to maximize their total revenues.
D)they both try to minimize their average fixed costs.
E)they set the price such that marginal revenue equals average total cost.
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42
A firm's markup is
A)the firm's total profit.
B)the firm's total cost.
C)the amount by which price exceeds marginal cost.
D)the amount by which price equals marginal cost.
E)the amount by which price is less than marginal cost.
A)the firm's total profit.
B)the firm's total cost.
C)the amount by which price exceeds marginal cost.
D)the amount by which price equals marginal cost.
E)the amount by which price is less than marginal cost.
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43
Which one of the following is true for perfect competition,monopolistic competition,and single-price monopoly?
A)Each firm produces an identical good.
B)Each firm makes zero long-run economic profit.
C)The profit maximizing quantity occurs at the quantity at which MC = MR.
D)Easy entry and exit.
E)None of the above.
A)Each firm produces an identical good.
B)Each firm makes zero long-run economic profit.
C)The profit maximizing quantity occurs at the quantity at which MC = MR.
D)Easy entry and exit.
E)None of the above.
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44
A firm has excess capacity if
A)it produces above its efficient scale.
B)it produces below its efficient scale.
C)it produces the same level as its efficient scale.
D)it sells some of its factors of production.
E)it improves the quality of its factors of production.
A)it produces above its efficient scale.
B)it produces below its efficient scale.
C)it produces the same level as its efficient scale.
D)it sells some of its factors of production.
E)it improves the quality of its factors of production.
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45
What will happen in the long run if firms in monopolistic competition incur economic loss?
A)Firms will continue producing and endure the losses.
B)Firms will leave the industry until the remaining firms make positive economic profit.
C)Firms will ask the government for financial aid.
D)Firms will leave the industry until the remaining firms make zero economic profit.
E)The level of investment in this industry will increase to boost the economy.
A)Firms will continue producing and endure the losses.
B)Firms will leave the industry until the remaining firms make positive economic profit.
C)Firms will ask the government for financial aid.
D)Firms will leave the industry until the remaining firms make zero economic profit.
E)The level of investment in this industry will increase to boost the economy.
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46
In monopolistically competitive industries,
A)firms compete on quality, price and marketing.
B)the range of choice of products is the same as in perfectly competitive industries.
C)firms are insensitive to changes in consumer demand.
D)all firms produce a quantity at which marginal cost is greater than marginal benefit.
E)all firms make an economic profit.
A)firms compete on quality, price and marketing.
B)the range of choice of products is the same as in perfectly competitive industries.
C)firms are insensitive to changes in consumer demand.
D)all firms produce a quantity at which marginal cost is greater than marginal benefit.
E)all firms make an economic profit.
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47
In the long run,a monopolistically competitive firm will make the same economic profit as
A)a monopolistically competitive firm in the short run.
B)a single-price monopoly.
C)a price-discriminating monopoly.
D)a perfectly competitive firm in long-run equilibrium.
E)none of the above.
A)a monopolistically competitive firm in the short run.
B)a single-price monopoly.
C)a price-discriminating monopoly.
D)a perfectly competitive firm in long-run equilibrium.
E)none of the above.
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48
Mrs.Smith's bakery shop is a firm in monopolistic competition.She is currently selling a box of bread for $16.The firm's marginal cost is $7 and marginal revenue is $7.To maximize economic profit Mrs.Smith
A)shuts down.
B)decreases output so that marginal revenue exceeds marginal cost.
C)continues to produce the same level of output.
D)increases output so that marginal cost exceeds marginal revenue.
E)decreases output so that marginal cost equals the output price.
A)shuts down.
B)decreases output so that marginal revenue exceeds marginal cost.
C)continues to produce the same level of output.
D)increases output so that marginal cost exceeds marginal revenue.
E)decreases output so that marginal cost equals the output price.
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49
Markup
A)does not exist in monopoly.
B)does not exist in monopolistic competition.
C)exists in perfect competition.
D)is the difference between price and average total cost.
E)exists in both monopoly and monopolistic competition.
A)does not exist in monopoly.
B)does not exist in monopolistic competition.
C)exists in perfect competition.
D)is the difference between price and average total cost.
E)exists in both monopoly and monopolistic competition.
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50
Mrs.Smith's bakery shop is a firm in monopolistic competition.The firm's marginal revenue curve
A)is upward sloping.
B)is downward sloping and above the demand curve.
C)is a horizontal line.
D)is the same as the demand curve.
E)is downward sloping and lies below the demand curve.
A)is upward sloping.
B)is downward sloping and above the demand curve.
C)is a horizontal line.
D)is the same as the demand curve.
E)is downward sloping and lies below the demand curve.
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51
In the long run,a monopolistically competitive firm produces the output at which price equals
A)marginal cost.
B)marginal revenue.
C)average variable cost.
D)average total cost.
E)B and D.
A)marginal cost.
B)marginal revenue.
C)average variable cost.
D)average total cost.
E)B and D.
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52
Excess capacity in monopolistically competitive firms occurs because
A)each firm faces a demand that is perfectly elastic.
B)each firm builds a huge plant.
C)the existence of slightly differentiated products, serving almost the same purpose, causes a waste of precious natural resources.
D)firms produce an output that is less than the output at minimum average total cost.
E)marginal cost is too high.
A)each firm faces a demand that is perfectly elastic.
B)each firm builds a huge plant.
C)the existence of slightly differentiated products, serving almost the same purpose, causes a waste of precious natural resources.
D)firms produce an output that is less than the output at minimum average total cost.
E)marginal cost is too high.
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53
Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.In the long run,
A)new firms enter, and each existing firm's demand curve shifts leftward.
B)new firms enter, and each existing firm's demand curve shifts rightward.
C)existing firms exit, and each remaining firm's demand curve shifts leftward.
D)existing firms exit, and each remaining firm's demand curve shifts rightward.
E)the equilibrium is the same as in the short run.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.In the long run,
A)new firms enter, and each existing firm's demand curve shifts leftward.
B)new firms enter, and each existing firm's demand curve shifts rightward.
C)existing firms exit, and each remaining firm's demand curve shifts leftward.
D)existing firms exit, and each remaining firm's demand curve shifts rightward.
E)the equilibrium is the same as in the short run.
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54
In the long run,the firm in monopolistic competition
A)faces a perfectly elastic demand.
B)produces more than the quantity at minimum ATC.
C)produces less than the quantity at minimum ATC.
D)produces the quantity at minimum ATC.
E)makes an economic profit.
A)faces a perfectly elastic demand.
B)produces more than the quantity at minimum ATC.
C)produces less than the quantity at minimum ATC.
D)produces the quantity at minimum ATC.
E)makes an economic profit.
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55
Consider a monopolistically competitive industry in long-run equilibrium.Suppose there is a large increase in wages that raises the costs for all firms.What happens within each firm in the short run?
A)They will be forced to close down due to the excess costs.
B)They will continue producing as before, cushioned by their previous excess profits.
C)They will expand output and try to make up for lost profits.
D)They will lower prices and try to steal customers away from their rivals.
E)They will decrease production and produce the quantity at which marginal revenue equals the new (higher)marginal cost curve;this means a rise in price.
A)They will be forced to close down due to the excess costs.
B)They will continue producing as before, cushioned by their previous excess profits.
C)They will expand output and try to make up for lost profits.
D)They will lower prices and try to steal customers away from their rivals.
E)They will decrease production and produce the quantity at which marginal revenue equals the new (higher)marginal cost curve;this means a rise in price.
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56
Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What price does the firm charge?
A)P2
B)P1
C)P4
D)P3
E)P5
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What price does the firm charge?
A)P2
B)P1
C)P4
D)P3
E)P5
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57
Under monopolistic competition,long-run economic profit is zero because of
A)product differentiation.
B)no barriers to entry.
C)excess capacity.
D)economic inefficiency.
E)the downward-sloping demand curve facing each firm.
A)product differentiation.
B)no barriers to entry.
C)excess capacity.
D)economic inefficiency.
E)the downward-sloping demand curve facing each firm.
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58
Use the figure below to answer the following questions.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What is the firm's level of output?
A)Q1
B)Q2
C)Q3
D)Q4
E)zero.
Figure 14.2.4
Refer to Figure 14.2.4.The figure represents a monopolistically competitive firm in short-run equilibrium.What is the firm's level of output?
A)Q1
B)Q2
C)Q3
D)Q4
E)zero.
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59
Mrs.Smith's bakery shop is a firm in monopolistic competition.If in the short-run Mrs.Smith incurs an economic loss,she will keep producing as long as
A)price is less than average variable cost.
B)price is equal to marginal cost.
C)price is greater than or equal to average variable cost.
D)marginal revenue is greater than or equal to average variable cost.
E)marginal revenue is less than average variable cost.
A)price is less than average variable cost.
B)price is equal to marginal cost.
C)price is greater than or equal to average variable cost.
D)marginal revenue is greater than or equal to average variable cost.
E)marginal revenue is less than average variable cost.
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60
The real-estate industry is monopolistically competitive,so in this industry
A)the market demand curve is a horizontal line.
B)the market demand curve is upward sloping.
C)there are few realtors in the market.
D)excess capacity exists.
E)excess capacity does not exist.
A)the market demand curve is a horizontal line.
B)the market demand curve is upward sloping.
C)there are few realtors in the market.
D)excess capacity exists.
E)excess capacity does not exist.
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61
For a monopolistically competitive firm to be making an economic profit,
A)the production period must be the short run.
B)the production period must be the long run.
C)rival firms must not exist.
D)its rivals must also be making an economic profit.
E)barriers to entry must exist.
A)the production period must be the short run.
B)the production period must be the long run.
C)rival firms must not exist.
D)its rivals must also be making an economic profit.
E)barriers to entry must exist.
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62
Use the figure below to answer the following questions.
Figure 14.2.6
In the long-run,a firm in monopolistic competition produces at an output level where
A)P > ATC and MR = MC.
B)P > ATC and MR > MC.
C)P = ATC and MR = MC.
D)P = ATC and MR > MC.
E)P > ATC and MC > ATC.
Figure 14.2.6
In the long-run,a firm in monopolistic competition produces at an output level where
A)P > ATC and MR = MC.
B)P > ATC and MR > MC.
C)P = ATC and MR = MC.
D)P = ATC and MR > MC.
E)P > ATC and MC > ATC.
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63
Firms in monopolistic competition have rivals that
A)will always match their price increases.
B)will always match their price decreases but not their price increases.
C)all agree on a common price.
D)set their price where the demand curve is tangent to the average cost curve.
E)set their price according to the demand they face.
A)will always match their price increases.
B)will always match their price decreases but not their price increases.
C)all agree on a common price.
D)set their price where the demand curve is tangent to the average cost curve.
E)set their price according to the demand they face.
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64
Choose the correct statement about firms in monopolistic competition.
A)A firm must lower its price to sell a greater quantity.
B)A firm can never incur an economic loss.
C)Price is never more than marginal cost.
D)Firms offer identical products.
E)The most a firm can make is zero economic profit.
A)A firm must lower its price to sell a greater quantity.
B)A firm can never incur an economic loss.
C)Price is never more than marginal cost.
D)Firms offer identical products.
E)The most a firm can make is zero economic profit.
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65
Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it charges ________ per jacket.
A)$100
B)$95
C)$75
D)$120
E)$90
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it charges ________ per jacket.
A)$100
B)$95
C)$75
D)$120
E)$90
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66
Use the figure below to answer the following questions.
Figure 14.2.5
Refer to Figure 14.2.5.The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.
A)zero
B)$2
C)$4
D)$6
E)$10
Figure 14.2.5
Refer to Figure 14.2.5.The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.The firm's markup is ________ per calculator.
A)zero
B)$2
C)$4
D)$6
E)$10
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67
Which one of the following characteristics is not shared by single-price monopoly and monopolistic competition?
A)Firms face a downward-sloping demand curve.
B)Profit-maximizing quantity occurs where MC = MR.
C)Price charged is the highest consumers are willing to pay.
D)Firms make an economic profit in the long run.
E)The marginal revenue curve lies below the demand curve.
A)Firms face a downward-sloping demand curve.
B)Profit-maximizing quantity occurs where MC = MR.
C)Price charged is the highest consumers are willing to pay.
D)Firms make an economic profit in the long run.
E)The marginal revenue curve lies below the demand curve.
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68
Which one of the following characteristics is shared by perfect competition and monopolistic competition?
A)Firms face a downward-sloping demand curve.
B)Profit-maximizing quantity occurs where MC = MR.
C)Long-run equilibrium price equals minimum ATC.
D)Firms make an economic profit in the long run.
E)None of the above.
A)Firms face a downward-sloping demand curve.
B)Profit-maximizing quantity occurs where MC = MR.
C)Long-run equilibrium price equals minimum ATC.
D)Firms make an economic profit in the long run.
E)None of the above.
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69
Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.
A)loss;$8,000
B)loss;$13,000
C)profit;$7,200
D)profit;$13,000
E)loss;$8,960
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap's economic ________ is ________ a day.
A)loss;$8,000
B)loss;$13,000
C)profit;$7,200
D)profit;$13,000
E)loss;$8,960
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70
Use the figure below to answer the following questions.
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it sells ________ jackets per day.
A)200
B)240
C)275
D)140
E)280
Figure 14.2.6
Refer to Figure 14.2.6,which shows the demand curve,marginal revenue curve and cost curves faced by Gap.Gap maximizes its profit if it sells ________ jackets per day.
A)200
B)240
C)275
D)140
E)280
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71
Choose the correct statement about firms in monopolistic competition.
A)All firms make positive economic profit.
B)The price is set equal to marginal cost to achieve maximum economic profit.
C)Price is lower than in perfect competition.
D)Production always takes place at minimum average total cost.
E)The price is always greater than the marginal cost.
A)All firms make positive economic profit.
B)The price is set equal to marginal cost to achieve maximum economic profit.
C)Price is lower than in perfect competition.
D)Production always takes place at minimum average total cost.
E)The price is always greater than the marginal cost.
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72
Which of the following is always true regarding a profit-maximizing monopolistically competitive firm in short-run equilibrium?
A)P = ATC
B)P = MR
C)MR = MC
D)MC = ATC
E)P = MC
A)P = ATC
B)P = MR
C)MR = MC
D)MC = ATC
E)P = MC
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73
Which of the following are true? The similarities between perfect competition and monopolistic competition include:
(1) no barriers to entry.
(2) profit-maximizing output occurs where MC = MR.
(3) long-run economic profit equals zero.
A)(1)only
B)(2)only
C)(1)and (2)only
D)(2)and (3)only
E)(1), (2), and (3)
(1) no barriers to entry.
(2) profit-maximizing output occurs where MC = MR.
(3) long-run economic profit equals zero.
A)(1)only
B)(2)only
C)(1)and (2)only
D)(2)and (3)only
E)(1), (2), and (3)
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74
For a firm in monopolistic competition,the marginal cost curve intersects the average total cost curve
A)at the minimum average total cost.
B)to the left of the minimum average total cost.
C)to the right of the minimum average total cost.
D)at no point.
E)at the same quantity at which the marginal cost curve intersects the marginal revenue curve.
A)at the minimum average total cost.
B)to the left of the minimum average total cost.
C)to the right of the minimum average total cost.
D)at no point.
E)at the same quantity at which the marginal cost curve intersects the marginal revenue curve.
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75
When firms in monopolistic competition incur an economic loss
A)firms enter the industry and produce better products.
B)firms exit the industry, and demand increases for the products of the firms that remain.
C)firms exit the industry, and demand decreases for the firms that remain in the industry.
D)firms enter the industry, and demand increases for the firms that were originally in the industry.
E)the industry will eventually disappear.
A)firms enter the industry and produce better products.
B)firms exit the industry, and demand increases for the products of the firms that remain.
C)firms exit the industry, and demand decreases for the firms that remain in the industry.
D)firms enter the industry, and demand increases for the firms that were originally in the industry.
E)the industry will eventually disappear.
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76
Use the figure below to answer the following questions.
Figure 14.2.5
Refer to Figure 14.2.5 The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?
A)zero
B)between $1 and $700
C)between $701 and $900
D)more than $901
E)less than zero
Figure 14.2.5
Refer to Figure 14.2.5 The figure shows the situation facing Smart Digit,Inc.,a firm in monopolistic competition that produces calculators.What is the firm's economic profit per day?
A)zero
B)between $1 and $700
C)between $701 and $900
D)more than $901
E)less than zero
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77
Use the figure below to answer the following question.
Figure 14.2.7
Refer to Figure 14.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of
A)4 units.
B)8 units.
C)16 units.
D)$10.
E)$5.
Figure 14.2.7
Refer to Figure 14.2.7.The figure shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm in the long run.The firm has excess capacity of
A)4 units.
B)8 units.
C)16 units.
D)$10.
E)$5.
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78
Use the figure below to answer the following questions.
Figure 14.2.6
Consider a monopolistically competitive industry which is in long-run equilibrium.Which of the following is true?
A)All firms charge a price equal to average total cost.
B)All firms charge a price equal to marginal cost.
C)All firms make an economic profit.
D)The demand, average total cost, and marginal cost curves all intersect at the same point.
E)Firms have an incentive to enter the industry.
Figure 14.2.6
Consider a monopolistically competitive industry which is in long-run equilibrium.Which of the following is true?
A)All firms charge a price equal to average total cost.
B)All firms charge a price equal to marginal cost.
C)All firms make an economic profit.
D)The demand, average total cost, and marginal cost curves all intersect at the same point.
E)Firms have an incentive to enter the industry.
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79
When firms in monopolistic competition make an economic profit
A)firms enter the industry, which increases demand for the product of the firms originally in the market.
B)firms exit the industry, and demand increases for the products of the firms that remain.
C)firms exit the industry, and demand decreases for the firms that remain in the industry.
D)firms enter the industry, and demand decreases for the firms that were originally in the industry.
E)eventually the market will become a monopoly.
A)firms enter the industry, which increases demand for the product of the firms originally in the market.
B)firms exit the industry, and demand increases for the products of the firms that remain.
C)firms exit the industry, and demand decreases for the firms that remain in the industry.
D)firms enter the industry, and demand decreases for the firms that were originally in the industry.
E)eventually the market will become a monopoly.
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80
Firms in monopolistic competition make zero economic profit in the long run because
A)their costs rise over time.
B)the demand they face decreases as rival firms offer slightly differentiated products for sale in the same market.
C)their marginal cost curves slope upward.
D)the market eventually becomes perfectly competitive.
E)both A and B are correct.
A)their costs rise over time.
B)the demand they face decreases as rival firms offer slightly differentiated products for sale in the same market.
C)their marginal cost curves slope upward.
D)the market eventually becomes perfectly competitive.
E)both A and B are correct.
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افتح القفل للوصول البطاقات البالغ عددها 111 في هذه المجموعة.
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k this deck
فتح الحزمة
افتح القفل للوصول البطاقات البالغ عددها 111 في هذه المجموعة.
