Question 1

Brand management refers to
A) picking a brand name for a new product that will attract attention.
B) the efforts to maintain the differentiation of a product over time.
C) efforts to reduce the cost of production.
D) selling the right to use a brand name in a particular market.

Accepted Answer

Brand management refers to the efforts to maintain the differentiation of a product over time. This involves managing the brand identity, developing brand strategies, and creating brand value. It includes activities such as brand positioning, brand communication, brand extension, and brand maintenance. Picking a brand name, reducing production costs, and selling the right to use a brand name are all aspects of brand management, but they are not the primary focus.

Question 2

What is meant by "excess capacity"? How does it relate to consumer utility?

Accepted Answer

The answer of What is meant by "excess capacity"? How...

Question 3

Figure 13-19 
-Refer to Figure 13-19 to answer the following questions.
a.What is the productively efficient output?
b.What is the allocatively efficient output?
c.What is the amount of excess capacity?
d.Suppose the firm is currently producing 14 units.What happens if it increases output to 17 units?

Accepted Answer

The answer of Figure 13-19 
-Refer to Figure 13-19 to...

Question 4

Productive efficiency does not hold for a profit-maximizing,monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies-of-scale region of its average total cost curve.

Accepted Answer

The answer of Productive efficiency does not hold for a...

Question 5

In the long-run equilibrium,both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR=MC and charge a price equal to the average total cost of production.

Accepted Answer

The answer of In the long-run equilibrium,both the perfectly competitive...

Question 6

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to
A) differentiate Air Jordan basketball shoes from other types of basketball shoes.
B) lower the marginal cost of producing Air Jordan basketball shoes.
C) increase its profit by raising the price of Air Jordan basketball shoes.
D) convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities.

Accepted Answer

Nike is attempting to differentiate Air Jordan basketball shoes from other types of basketball shoes by using Michael Jordan to create the impression that they are superior. This helps to make Air Jordans stand out in the market and justify charging a higher price for them.

Question 7

Monopolistically competitive firms can differentiate their products
A) by producing at minimum efficient scale.
B) by producing where marginal revenue equals marginal cost.
C) by equating price and average total cost.
D) through marketing.

Accepted Answer

Monopolistically competitive firms can differentiate their products through marketing to create a perceived difference in quality or features, which allows them to charge slightly higher prices than those of their competitors. This differentiation can lead to brand loyalty, creating a degree of market power for the firm.

Question 8

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long run equilibrium for the two types of firms.

Accepted Answer

The answer of Explain the similarities and differences between the...

Question 9

A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

Accepted Answer

In the long run, monopolistic competitors will face competition from rivals that offer similar or better products, which will drive down prices and reduce profits. To maintain profits, monopolistic competitors must continually innovate and differentiate their products to stay ahead of competitors and maintain a loyal customer base. Failure to do so will result in eventual loss of profits in the long run.

Question 10

Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?

Accepted Answer

The answer of Does the fact that monopolistically competitive firms...

Question 11

A trademark is
A) a legal instrument which grants a firm the right to differentiate its product.
B) a legal right to position a firm's product in high-traffic public areas such as airports and post offices.
C) a patent on a firm's product.
D) a distinguishing attribute such as a sign or logo that allows a firm to uniquely identify its product.

Accepted Answer

A trademark is a distinguishing attribute, such as a sign, logo, or symbol that enables a firm to uniquely identify its product and differentiate it from those of its competitors. It grants the firm exclusive rights to use the trademark in association with its goods or services, and prevents others from using similar marks that could cause confusion in the minds of consumers.

Question 12

When a credit card company offers different services with its card,like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card,the credit card company is trying to
A) create a barrier to entry for competing firms.
B) create a perfectly competitive market in which to sell its credit card.
C) convince customers that its card has greater value than those offered by rival firms.
D) shift the demand curve for competing firms to the right.

Accepted Answer

By offering additional services such as travel and product insurance, the credit card company is adding value to its product and differentiating it from its competitors, persuading customers that its card has greater value. This helps in convincing customers to choose its card over others, thus creating a competitive advantage.

Question 13

Although advertising raises the price of a monopolistic competitor's product,it does confer a benefit to consumers.Which of the following is a benefit to consumers?
A) Advertising acts as a barrier to entry.
B) Advertising engenders brand loyalty.
C) Advertising could provide consumers with useful information about new products and enable them to comparison shop.
D) Advertised products tend to be of higher quality so consumers feel special when they consume advertised products.

Accepted Answer

Advertising can provide consumers with useful information about new products and enable them to comparison shop, leading to more informed purchasing decisions and potentially lower prices for consumers. Options A and B are incorrect because they describe benefits to the monopolistic competitor rather than to consumers, and option D is generally not true as advertised products do not necessarily have higher quality than non-advertised products.

Question 14

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

Accepted Answer

The answer of Both the perfectly competitive firm and the...

Question 15

One of your classmates asserts that advertising,marketing research,and brand management are redundant expenditures because a firm can obtain the same information by simply looking at what customers are already buying.Which of the following is not a response you might offer her?
A) Conducting market research is a good way for firms to keep abreast of changing consumer tastes and preferences.
B) Advertising and brand management allow a firm to create an entry barrier which will insulate the firm from competition and from undertaking further product innovations.
C) Marketing research could allow a firm to identify new market opportunities and at least, in the short run, a firm can make a profit supplying products to this market segment.
D) If a firm successfully manages its brand, customers become less price sensitive as they perceive fewer substitutes for the firm's brand.

Accepted Answer

This response is not a valid counterargument to the classmate's assertion as it promotes advertising and brand management for reasons other than obtaining information about customer behavior. The other options all provide valid reasons for conducting marketing research and investing in advertising and brand management.

Question 16

Which of the following statements is true about advertising by a monopolistically competitive firm?
A) Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products.
B) Advertising could make the monopolistic competitor's demand more inelastic, but advertising has no effect on a perfect competitor's demand.
C) Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm's product.
D) Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry.

Accepted Answer

Advertising by a monopolistically competitive firm could make its demand more inelastic as it creates brand loyalty and differentiation. However, advertising has no effect on a perfect competitor's demand as their products are identical. In the long run, monopolistically competitive firms do not make zero profit as they have some degree of market power due to product differentiation. Therefore, advertising may not be a waste of resources for them. Colluding with other firms to advertise the products of the industry as a whole is a form of oligopoly behavior and not typical of monopolistic competition.

Question 17

Juicy Couture has been successful in selling women's clothing using an unusual strategy. According to an article in the Wall Street Journal,the key to the firm's strategy is to "limit distribution to maintain the brand's exclusive cachet,even if that means sacrificing sales,a brand-management technique once used only for high-end luxury brands." In 2006,Juicy clothes were sold in only four department stores: Neiman Marcus,Saks,Bloomingdale's,and Nordstrom.In 2006,its sales have more than quadrupled since 2002.
Source: Rachel Dodes,"From Track Suits to Fast Track," Wall Street Journal,September 13,2006.
How does limiting the number of stores in which Juicy's products are sold contribute to its success?
A) By sacrificing sales, the company was able to focus on producing high quality products.
B) It enables Juicy to price its products at a premium and differentiate them from lower priced products.
C) It helps establish Juicy's products as luxury items favored by the very wealthy.
D) Maintaining the exclusivity of a product increases the demand for the product.

Accepted Answer

The answer of Juicy Couture has been successful in selling...

Question 18

Which of the following is a disadvantage of trademarking a firm's product?
A) A trademark differentiates a firm's product.
B) A trademark conveys information about the product to the public.
C) A trademark may become so widely used to denote a particular type of product that the trademark may no longer be a legally protected brand name.
D) A trademark does not affect demand for the firm's product.

Accepted Answer

If a trademarked name becomes widely used to describe a particular type of product, it may become a generic term, and as such, it might no longer be entitled to legal protection as a brand name.

Question 19

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Accepted Answer

The answer of Economists believe that consumers would be better...

Question 20

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

Accepted Answer

Monopolistically competitive firms do not achieve productive efficiency because they do not produce at the minimum point of their average cost curve. However, they may achieve allocative efficiency in the long run because they produce at a point where price equals marginal cost.

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

Brand management refers to

What is meant by "excess capacity"? How does it relate to consumer utility?

Productive efficiency does not hold for a profit-maximizing,monopolistically competitive firm in the long-run equilibrium because the firm operates along the diseconomies-of-scale region of its average total cost curve.

In the long-run equilibrium,both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR=MC and charge a price equal to the average total cost of production.

Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes.Nike is attempting to

Monopolistically competitive firms can differentiate their products

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long run equilibrium for the two types of firms.

A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?

A trademark is

When a credit card company offers different services with its card,like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card,the credit card company is trying to

Although advertising raises the price of a monopolistic competitor's product,it does confer a benefit to consumers.Which of the following is a benefit to consumers?

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

One of your classmates asserts that advertising,marketing research,and brand management are redundant expenditures because a firm can obtain the same information by simply looking at what customers are already buying.Which of the following is not a response you might offer her?

Which of the following statements is true about advertising by a monopolistically competitive firm?

Which of the following is a disadvantage of trademarking a firm's product?

Economists believe that consumers would be better off if markets were perfectly competitive rather than monopolistically competitive.

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.