Question 1

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 market supply and demand and are therefore beyond the control of any individual firm. Product differentiation, lower average total cost, and competent managers are all factors that a firm can control to some extent through its own actions and decisions.

Question 2

Which of the following statements is true?
A)Input prices are one of the success factors that firms can control.
B)Consumers will buy a product only if its price is below that of its competitors.
C)Consumers will buy a product only if it meets a need not met by competing products.
D)Sheer chance often plays a significant role in the success or failure of a business.

Accepted Answer

The answer of Which of the following statements is true?
A)Input...

Question 3

In a monopolistically competitive market, a successful new restaurant
A)can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants.
B)will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product.
C)will face high entry barriers because of health and safety regulations to which all restaurants are subject.
D)must obtain a trademark to ensure that it will break even in the long run.

Accepted Answer

In a monopolistically competitive market, there are low barriers to entry, meaning that new restaurants can easily enter the market. This means that any economic profits earned by the successful new restaurant will attract new competitors until the economic profits are competed away. However, competition in the market will still lead to differentiation of products, as each restaurant will try to offer something unique to attract customers. Therefore, the successful new restaurant will earn zero economic profit in the long run, but will still be able to differentiate its product and attract customers. There is no mention of entry barriers related to health and safety regulations or trademarks in the question, so choices C and D can be eliminated. Choice A is incorrect because if the successful new restaurant tries to use barriers to restrict entry by new restaurants, it would be in violation of antitrust laws.

Question 4

How might a monopolistically competitive firm continually earn economic profit greater than zero?

Accepted Answer

The answer of How might a monopolistically competitive firm continually...

Question 5

The ability to engage in product differentiation is one of the factors a manager or owner of a firm can control in order to create value for consumers.

Accepted Answer

Product differentiation is the process of distinguishing a product or service from others to make it more appealing to a particular target market. This is an aspect that a manager or owner of a firm can control to create value for consumers. By offering unique features, quality, or packaging, the firm can establish a competitive advantage and charge a higher price, thus providing value to its customers.

Question 6

Being the first to sell a particular good can give a firm advantages over other firms that sell similar products.What is the name given to these advantages?
A)first-mover
B)first come, first served
C)follow the leader
D)first to market

Accepted Answer

The advantages given to a firm for being the first to sell a particular good is known as first-mover advantage. This can include things like brand recognition, customer loyalty, and the ability to set prices.

Question 7

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 8

How would a marketing campaign directed at single women improve the chances of success at a place like a cigar bar?

Accepted Answer

The answer of How would a marketing campaign directed at...

Question 9

Explain the significance of brand management to a firm that has differentiated its product.Comment specifically on the importance of obtaining a trademark.

Accepted Answer

The answer of Explain the significance of brand management to...

Question 10

A monopolistically competitive firm can convince buyers that its product has value by differentiating its product to suit consumers' preferences.

Accepted Answer

Monopolistically competitive firms differentiate their products through branding, packaging, quality, and other factors in order to make them appear more attractive to consumers than their competitors' products. This differentiation creates a perceived value in the minds of consumers, which can lead to higher demand and the ability to charge a higher price, resulting in higher profits for the firm.

Question 11

The marketing of the first ballpoint pen by Milton Reynolds showed
A)that first-mover advantages can make it more difficult for new firms to enter a market and compete against the first mover.
B)that being the first firm to market a new product can result in a natural monopoly.
C)that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market.
D)how important it is to receive patent protection for a new product.

Accepted Answer

Reynolds was the first to market a ballpoint pen, but later experienced competition from other companies. This shows that being the first mover may not necessarily lead to a long-term advantage over competitors.

Question 12

If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic.

Accepted Answer

If buyers feel the products of different sellers in a monopolistically competitive market are similar, they can easily switch to another seller's product if the price changes, making the demand elastic.

Question 13

If a firm can produce a product at a lower average cost than its competitors, it stands a better chance of earning economic profit.

Accepted Answer

This is because if the firm can produce at a lower cost, it can either sell its product at a lower price or earn a higher margin on its products than competitors without sacrificing quality, which can result in higher sales volume and higher profit margins.

Question 14

What are the key factors that determine the profitability of a firm in a monopolistically competitive market?

Accepted Answer

The answer of What are the key factors that determine...

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

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?

Which of the following statements is true?

In a monopolistically competitive market, a successful new restaurant