Question 1

One goal a firm tries to achieve when it advertises a product is to
A) make the demand curve for the product more elastic.
B) shift the demand curve for the product to the left.
C) make the demand curve for the product unitary elastic.
D) make the demand curve for the product more inelastic.

Accepted Answer

The goal of advertising is to convince consumers that they need or want a product, which should make the demand curve for the product more inelastic. This means that changes in price will have less of an impact on quantity demanded, allowing the firm to charge a higher price without losing too many customers.

Question 2

Some factors that allow firms to make economic profits are beyond its control. All but one of the following is an uncontrollable factor. Which factor is controllable?
A) input prices
B) consumer tastes
C) chance events
D) product differentiation

Accepted Answer

The answer of Some factors that allow firms to make...

Question 3

What is the difference between the terms "marketing" and "advertising"?

Accepted Answer

The answer of What is the difference between the terms...

Question 4

If buyers of a monopolistically competitive product feel the products of different sellers are strongly differentiated, then the demand for each seller's product is
A) perfectly inelastic.
B) perfectly elastic.
C) relatively inelastic.
D) relatively elastic.

Accepted Answer

The answer of If buyers of a monopolistically competitive product...

Question 5

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market. An example that has been used to illustrate this is
A) McDonald's entry into the high-end coffee market.
B) Xerox, which became a generic term for making photocopies.
C) Abercrombie and Fitch, which was the first clothing company to market to young men.
D) the introduction of the first ballpoint pen in 1945.

Accepted Answer

The answer of Recent research has shown that the first...

Question 6

A firm that successfully differentiates its product or lowers its average cost of production creates
A) value for its customers.
B) entry barriers into its market.
C) a perfectly inelastic demand curve for its product.
D) economies of scale.

Accepted Answer

The answer of A firm that successfully differentiates its product...

Question 7

Article Summary
In Colorado, recreational marijuana is legal but smoking in hotels is not. Former Wall Street lawyer Joel Schneider found a way around this legal conundrum by opening a bed-and-breakfast (B&B), which he refers to as Bud+Breakfast. In Colorado, B&Bs are considered private property and therefore not subject to the no-smoking laws, and Schneider does not allow guests under the age of 21, the legal age to buy marijuana in the state. With six suites ranging from $299 - $399 per night, revenues in 2016 averaged $110,000 per month. His success has allowed him to expand to three properties, with hopes of franchising to other states where recreational marijuana is also legal.

-Refer to the Article Summary. By marketing to recreational marijuana users, Joel Schneider is trying to set his business apart from competing hotels and lodging establishments. This is an example of
A) defending a brand name.
B) blocking entry into the market.
C) legally enforcing a trademark.
D) product differentiation.

Accepted Answer

By targeting a specific customer segment (recreational marijuana users), Joel Schneider is differentiating his B&B from other lodging establishments and creating a unique selling proposition for his business. This is an example of product differentiation.

Question 8

Discuss the role of product differentiation and advertising in monopolistic competition.

Accepted Answer

The answer of Discuss the role of product differentiation and...

Question 9

In the highly competitive fast-food restaurant market, brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

Accepted Answer

Brand name restaurants have a reputation to maintain, and any negative publicity can harm their business. Therefore, they have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

Question 10

Which of the following is an example of a factor that a firm's owners and managers can control in making the firm successful?
A) the ability to produce the product at a lower cost
B) changing consumer tastes
C) a rise in the price of a key input, for example, a rise in the price of oil leads to higher energy costs
D) the number of competitors in the market

Accepted Answer

The ability to produce a product at a lower cost is something that the firm's owners and managers can control by improving operational efficiency, outsourcing, or implementing cost-cutting measures. This can contribute to the firm's profitability and success. The other options listed are external factors that may impact the firm's success but are outside the control of the firm's owners and managers.

Question 11

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

Accepted Answer

The answer of Draw a graph that shows the impact...

Question 12

Of the factors that are within the control of the firms owners, the most important factors that make a firm successful are
A) the establishment of trademarks for its products and the aggressive defense of those trademarks.
B) lobbying government to erect or enforce entry barriers in its markets and the marketing of its products as widely as possible.
C) the differentiation of its products and the production of products at a lower average cost than competing firms.
D) the selection of the prices of its products and the selection of the most productive and loyal employees.

Accepted Answer

The differentiation of products and production of products at a lower average cost are both key factors in making a firm successful. By differentiating products, a firm can create a loyal customer base that is willing to pay a premium for their unique products. By producing products at a lower cost than competing firms, the firm can offer lower prices to its customers or earn a higher profit margin. The other choices are either not within the control of the firm owners or are not as important as product differentiation and lower production costs.

Question 13

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

Accepted Answer

Marketing includes various activities such as market research, product development, pricing strategy, promotion, and distribution that are essential for a firm to sell a product to a consumer.

Question 14

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated. How do these problems affect the innovating firm?
A) The firm is protected by a first-mover advantage: initial design flaws tend not to harm a firm significantly because consumers resist changing products for fear of incurring high switching costs.
B) They reduce profits for the new innovations and open the door to competitors who can enter the new market with a better product.
C) Because these design flaws were not anticipated, consumers tend to be more forgiving and are likely to remain loyal to the company and its products.
D) The firm's cost increases as it improves the product but it will not be able to raise its price for fear of alienating customers. Consequently, its profits will erode although its market share remains secure.

Accepted Answer

Design flaws or problems with a new product can reduce profits for the innovating firm as well as open the door to competitors who can enter the new market with a better product. This can result in a loss of market share and a decrease in profitability.

Question 15

A successful trademark is one that becomes a generic name for a product, for example, "Kleenex" has become a generic term for tissues.

Accepted Answer

The answer of A successful trademark is one that becomes...

Question 16

Article Summary
In Colorado, recreational marijuana is legal but smoking in hotels is not. Former Wall Street lawyer Joel Schneider found a way around this legal conundrum by opening a bed-and-breakfast (B&B), which he refers to as Bud+Breakfast. In Colorado, B&Bs are considered private property and therefore not subject to the no-smoking laws, and Schneider does not allow guests under the age of 21, the legal age to buy marijuana in the state. With six suites ranging from $299 - $399 per night, revenues in 2016 averaged $110,000 per month. His success has allowed him to expand to three properties, with hopes of franchising to other states where recreational marijuana is also legal.

-Refer to the Article Summary. By marketing to recreational marijuana users, Joel Schneider is trying to set his business apart from competing hotels and lodging establishments. All else equal, if his concept remains successful, in the long run we would expect Schneider to experience
A) increased competition and lower economic profits.
B) increased competition and higher economic profits.
C) government regulation and no additional competition.
D) rising average costs and long-run economic profits.

Accepted Answer

The answer of Article Summary
In Colorado, recreational marijuana is legal...

Question 17

Advertising is the action of a firm that is intended to maintain the differentiation of its product over time.

Accepted Answer

The answer of Advertising is the action of a firm...

Question 18

A firm cannot control all of the factors that allow it to make economic profits. Which of the following is an example of an uncontrollable factor?
A) product differentiation
B) input prices
C) producing at a lower average total cost than competing firms
D) hiring competent managers

Accepted Answer

Input prices are determined by external factors such as supply and demand in the market and cannot be controlled by the firm. The other options listed (product differentiation, producing at a lower average total cost than competing firms, hiring competent managers) are all under the control of the firm to an extent and can be influenced by its decisions and actions.

Question 19

Why are many companies concerned about brand management?

Accepted Answer

The answer of Why are many companies concerned about brand...

Question 20

Why would an organization as large as the National Football League (NFL) incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?

Accepted Answer

The answer of Why would an organization as large as...

Quiz 13: Monopolistic Competition: the Competitive Model in a More Realistic Setting

One goal a firm tries to achieve when it advertises a product is to

Some factors that allow firms to make economic profits are beyond its control. All but one of the following is an uncontrollable factor. Which factor is controllable?

What is the difference between the terms "marketing" and "advertising"?

If buyers of a monopolistically competitive product feel the products of different sellers are strongly differentiated, then the demand for each seller's product is

Recent research has shown that the first firm to enter a market often does not have a long-term advantage over later entrants into the market. An example that has been used to illustrate this is

A firm that successfully differentiates its product or lowers its average cost of production creates

Discuss the role of product differentiation and advertising in monopolistic competition.

In the highly competitive fast-food restaurant market, brand name restaurants have a strong profit incentive to maintain high sanitary conditions and avoid any negative consequences.

Which of the following is an example of a factor that a firm's owners and managers can control in making the firm successful?

Draw a graph that shows the impact on a firm's profit when it increases spending on advertising and the increased advertising has no effect on the demand for a firm's product.

Of the factors that are within the control of the firms owners, the most important factors that make a firm successful are

Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated. How do these problems affect the innovating firm?

A successful trademark is one that becomes a generic name for a product, for example, "Kleenex" has become a generic term for tissues.

Advertising is the action of a firm that is intended to maintain the differentiation of its product over time.

A firm cannot control all of the factors that allow it to make economic profits. Which of the following is an example of an uncontrollable factor?

Why are many companies concerned about brand management?

Why would an organization as large as the National Football League (NFL) incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising?