Question 1

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. Suppose at the profit maximizing quantity, Zocalo charges $22 for each dinner entrée, and its ATC is equal to $24. What should Zocalo do?

Accepted Answer

The answer of Agave, Six Feet Under, Globe, Silk, Sotto...

Question 2

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000 and the streaming price remains constant. What is Karaoke Channel Online's total profit after the advertising begins?

Accepted Answer

The answer of The Karaoke Channel Online streams professional-grade karaoke...

Question 3

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000. What is Karaoke Channel Online's average total cost after the advertising begins?

Accepted Answer

The answer of The Karaoke Channel Online streams professional-grade karaoke...

Question 4

How do the characteristics of perfect competition and monopolistic competition differ?

Accepted Answer

The answer of How do the characteristics of perfect competition...

Question 5

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the long run, Globe could I. make a positive economic profit.
II) make zero economic profit.
III) incur an economic loss.

Accepted Answer

The question provides no information about the profitability of the other five restaurants, so we cannot make any assumptions about their economic profit or loss. However, Globe's profitability is uncertain based on the information given, so it could either make zero economic profit or incur an economic loss. Therefore, option B is the best choice.

Question 6

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the short-run profit maximizing quantity, J Brand's ATC was $180 and AVC was $100, which statement is true?

Accepted Answer

J Brand's short-run profit maximizing quantity indicates that their price is above average variable cost (AVC). This means that in the short run they will make a profit. As a result, they will continue to produce in the short run and in the long run, as long as their price is above their average total cost (ATC) and they can make a profit.

Question 7

Which of the following is NOT a true statement about perfectly competitive and monopolistically competitive firms?

Accepted Answer

The answer of Which of the following is NOT a...

Question 8

The market for wheat can be described at perfectly competitive while the market for pizza is better described as monopolistically competitive. Which of the following is a NOT a similarity between perfectly competitive and monopolistically competitive firms?

Accepted Answer

While both types of markets have multiple firms and allow for entry and exit, monopolistically competitive firms may not produce at their efficient scale due to product differentiation and a lack of perfect substitutes. This is not a similarity between perfectly competitive and monopolistically competitive firms.

Question 9

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000. What is Karaoke Channel Online's average total cost before the advertising begins?

Accepted Answer

The answer of The Karaoke Channel Online streams professional-grade karaoke...

Question 10

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

Accepted Answer

The answer of "One of the defining features of monopolistic...

Question 11

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Accepted Answer

If La Super Rica is currently producing where marginal revenue is greater than marginal cost, increasing production would lead to even higher profits since each additional unit produced will bring in more revenue than its cost to produce. Therefore, the best choice for La Super Rica to increase its profit would be to increase production.

Question 12

Which of the following four firms would most likely be part of a monopolistically competitive market?

Accepted Answer

Choice A is the best option as it includes multiple firms producing similar products (jeans) which are differentiated based on branding, style, and quality. This type of market structure is known as monopolistic competition. Choices B, C, and D all describe markets with unique products or services, which are not characteristic of monopolistic competition. Choice B describes a local, small-scale operation with no competition, while choices C and D describe markets where there is little to no competition at all.

Question 13

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the short run, Globe could experience I. economic profit.
II) zero economic profit.
III) economic loss.

Accepted Answer

In the short run, a restaurant like Globe can experience economic profit, zero economic profit, or economic loss due to fluctuations in demand, costs, and competition.

Question 14

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage ________, which decreases the ________ for each firm's meals.

Accepted Answer

Economic profit would encourage entry of new firms into the market. This increase in the number of firms would put downward pressure on the demand for each firm's meals, decreasing their prices. Therefore, option A is the correct answer as it suggests that entry would decrease demand.

Question 15

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market?

Accepted Answer

The answer of La Super Rica is a taco stand...

Question 16

In the December edition of Runner's World magazine, Karhu, Adidas, The North Face, and Brooks have full page running shoe advertisements. Which of the following is correct? I. Advertising increases Oris's total cost.
II) Advertising increases Oris's fixed costs.
III) All the advertising makes the demand curve faced by Oris more elastic.

Accepted Answer

The answer of In the December edition of Runner's World...

Question 17

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. Suppose La Super Rica maximizes its profit. If La Super Rica's lunch price is greater than its average total cost, which of the following statements is NOT true?

Accepted Answer

The answer of La Super Rica is a taco stand...

Question 18

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000 and the streaming price remains constant. What is Karaoke Channel Online's total profit before the advertising begins?

Accepted Answer

The answer of The Karaoke Channel Online streams professional-grade karaoke...

Question 19

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is true?

Accepted Answer

J Brand will continue to produce in the short run because its price exceeds its AVC. However, since its ATC is greater than its selling price, J Brand is making a loss on each unit produced. Over the long run, if J Brand cannot reduce its costs or increase its selling price, it will eventually go out of business.

Question 20

List four characteristics of monopolistic competition.

Accepted Answer

The answer of List four characteristics of monopolistic competition....

Quiz 14: Monopolistic Competition

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. Suppose at the profit maximizing quantity, Zocalo charges $22 for each dinner entrée, and its ATC is equal to $24. What should Zocalo do?

How do the characteristics of perfect competition and monopolistic competition differ?

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the long run, Globe could I. make a positive economic profit. II) make zero economic profit. III) incur an economic loss.

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the short-run profit maximizing quantity, J Brand's ATC was $180 and AVC was $100, which statement is true?

Which of the following is NOT a true statement about perfectly competitive and monopolistically competitive firms?

The market for wheat can be described at perfectly competitive while the market for pizza is better described as monopolistically competitive. Which of the following is a NOT a similarity between perfectly competitive and monopolistically competitive firms?

"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Which of the following four firms would most likely be part of a monopolistically competitive market?

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In the short run, Globe could experience I. economic profit. II) zero economic profit. III) economic loss.

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage , which decreases the for each firm's meals.

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is making an economic profit, what is the probable outcome in the taco market?

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is true?

List four characteristics of monopolistic competition.