Question 1

Use the following to answer question:
Figure: Monopolistic Competition III 
-(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.In the long run,the demand curve for Pat's Pizza Parlor will shift to the _____ as competitors _____ the market.

Accepted Answer

In the long run, as competitors enter the market, the demand for Pat's Pizza Parlor will decrease because consumers will have more options to choose from. This leads to a leftward shift in the demand curve.

Question 2

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby,along with every other deli in town,is producing the quantity that minimizes average total cost.Assuming the delis are maximizing profits,the:

Accepted Answer

In a monopolistically competitive market, if firms are producing at the quantity that minimizes average total cost and are maximizing profits, it indicates that there is no economic profit. This situation attracts new firms to enter the market, increasing the number of delis.

Question 3

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby is producing the quantity that minimizes his average total cost.Assuming that Toby is maximizing profits,his:

Accepted Answer

In a monopolistically competitive market, a profit-maximizing firm will produce the quantity where marginal cost equals marginal revenue. Since average total cost is minimized at a lower quantity, marginal cost must be less than average total cost.

Question 4

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.If other firms see economic profits in the industry,they will enter it,and the demand curve for firms already in the industry will shift to the _____;in the long run,this will result in an economic profit _____ zero and a price _____ ATC.

Accepted Answer

In monopolistic competition, if other firms enter the industry due to economic profits, the demand curve for existing firms shifts to the left. In the long run, this leads to economic profits being equal to zero and the price being equal to average total cost (ATC), as the market becomes more competitive and profits are normalized.

Question 5

Use the following to answer question:
Figure: Monopolistic Competition V 
-(Figure: Monopolistic Competition V)Use Figure: Monopolistic Competition V.In the figure,in the long run firms will:

Accepted Answer

In monopolistic competition, firms can enter and exit the market freely in the long run. As new firms enter the market, the demand for existing firms' products decreases, leading to a decrease in their prices and profits. As firms exit the market, the demand for existing firms' products increases, leading to an increase in their prices and profits. In the long run, the number of firms will adjust until all firms earn zero economic profit. Therefore, option A is correct.

Question 6

Use the following to answer question:
Figure: Monopolistic Competition VI 
-(Figure: Monopolistic Competition VI)Use Figure: Monopolistic Competition VI.In the figure,in the long run firms will:

Accepted Answer

The answer of Use the following to answer question:
Figure: Monopolistic...

Question 7

Use the following to answer question:
Figure: Monopolistic Competition II 
-(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor producing where price is greater than marginal revenue?

Accepted Answer

In a monopolistic competition market structure, firms face a downward-sloping demand curve, meaning that they can set their prices above marginal revenue. This characteristic is depicted in all panels (a), (b), and (c), where the price (determined by the demand curve) is above the marginal revenue at the quantity where marginal revenue equals marginal cost, which is the profit-maximizing condition for monopolistically competitive firms.

Question 8

Use the following to answer question:
Figure: Monopolistic Competition V 
-(Figure: Monopolistic Competition V)Use Figure: Monopolistic Competition V.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____.

Accepted Answer

The figure illustrates a firm in the short run of monopolistic competition. In the long run, due to the presence of entry and exit, the demand and marginal revenue curves will shift to the left, leading to a decrease in profit. Therefore, the best choice is C, where the firm is in the short run and the demand and marginal revenue curves will shift to the left in the long run.

Question 9

General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is initially in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that:

Accepted Answer

In a monopolistically competitive market, firms can differentiate their products to some extent, giving them some market power. When demand increases, firms can earn economic profits in the short run. However, in the long run, new firms will enter the market, attracted by the profits. This will increase competition and erode the market power of existing firms, leading to a return to normal profits in the long run. Therefore, choice A is the best option.

Question 10

Use the following to answer question:
Figure: Monopolistic Competition II 
-(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Panel(s)_____ in the figure show(s)a monopolistic competitor earning a loss in the short run.

Accepted Answer

The answer of Use the following to answer question:
Figure: Monopolistic...

Question 11

Use the following to answer question:
Figure: Monopolistic Competition III 
-(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.Pat's Pizza Parlor's profit at the profit-maximizing quantity will be:

Accepted Answer

In monopolistic competition, a firm maximizes profit where marginal revenue (MR) equals marginal cost (MC). The profit is the difference between total revenue and total cost at this quantity. The area representing profit is the rectangle formed by the price (from the demand curve at the profit-maximizing quantity), the average total cost (ATC) at this quantity, the profit-maximizing quantity on the horizontal axis, and the vertical axis. Without seeing the figure, the correct answer typically involves calculating this area or identifying it based on provided values. Given the choices, if $350 is an option, it suggests that based on the figure's data, the area representing profit (price - ATC, multiplied by quantity) equals $350.

Question 12

General Snacks is a typical firm in a market characterized by monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the short run the price of snacks will _____ and the market output of snacks will _____.

Accepted Answer

In the short run, an increase in market demand for snacks in a monopolistic competitive market leads to higher prices due to increased demand and higher market output as firms increase production to meet the new demand.

Question 13

Use the following to answer question:
Figure: Monopolistic Competition II 
-(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor in long-run equilibrium?

Accepted Answer

Panel (c) shows a monopolistic competitor in long-run equilibrium because the firm's average total cost curve is tangent to the demand curve at the profit-maximizing quantity, indicating that the firm is earning zero economic profit, which is a characteristic of long-run equilibrium in monopolistic competition.

Question 14

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing price and quantity are _____ and _____.

Accepted Answer

In panel (A) of a typical profit maximization graph for monopolistic competition, the profit-maximizing quantity is where the marginal cost (MC) curve intersects the marginal revenue (MR) curve, which is at point Q. The profit-maximizing price is then determined by going up to the demand curve from this quantity, which is at point P.

Question 15

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.A firm in monopolistic competition will maximize profits by producing so that:

Accepted Answer

In monopolistic competition, the firm maximizes profit by producing where marginal revenue (MR) equals marginal cost (MC). This is because MR represents the change in revenue from selling one more unit, while MC represents the change in cost from producing one more unit. When MR > MC, the firm can increase profits by producing more, and when MR < MC, the firm can increase profits by producing less. Therefore, the profit-maximizing level of output is where MR = MC.

Question 16

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In monopolistic competition,long-run equilibrium is characterized by:

Accepted Answer

In monopolistic competition, the demand curve faced by a firm is downward sloping, meaning that to sell more, the firm must lower its price. This results in a situation where the price (P) a firm charges for its product is greater than the marginal revenue (MR) it receives from selling one more unit, because lowering the price to sell one more unit reduces the revenue gained from units that could have been sold at a higher price. Therefore, P > MR characterizes monopolistic competition.

Question 17

Use the following to answer question:
Figure: Monopolistic Competition VI 
-(Figure: Monopolistic Competition VI)Use Figure: Monopolistic Competition VI.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____.

Accepted Answer

In the short run, a firm in monopolistic competition faces a downward-sloping demand curve. In the long run, however, new firms will enter the market, causing the demand curve for each firm to shift to the left.

Question 18

Use the following to answer question:
Figure: Monopolistic Competition II 
-(Figure: Monopolistic Competition II)Use Figure: Monopolistic Competition II.Which panel(s)in the figure show(s)a monopolistic competitor earning a profit in the short run?

Accepted Answer

Panel (a) shows a monopolistic competitor earning a profit in the short run because the price is above the average total cost (ATC) at the quantity produced.

Question 19

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In the short run,a firm in monopolistic competition may earn economic profits.The profits in panel (A)of the figure are:

Accepted Answer

The profits in panel (A) are represented by the area (P - S)× Q, where P is the price per unit, S is the average total cost per unit at quantity Q, and Q is the quantity of goods sold. This area represents the economic profit earned by the firm in the short run.

Question 20

(Figure: Monopolistic Competition IV)Use Figure: Monopolistic Competition IV.The firm in the figure is producing at the output level that maximizes profits (minimizes losses).The shaded rectangle represents the firm's: Figure: Monopolistic Competition IV

Accepted Answer

The shaded rectangle in the figure represents the firm's profit. At the profit-maximizing output level, the firm's total revenue is higher than its total cost, resulting in a positive profit.

Quiz 15: Monopolistic Competition and Product Differentiation

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby,along with every other deli in town,is producing the quantity that minimizes average total cost.Assuming the delis are maximizing profits,the:

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby is producing the quantity that minimizes his average total cost.Assuming that Toby is maximizing profits,his:

Use the following to answer question: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V) Use Figure: Monopolistic Competition V.In the figure,in the long run firms will:

Use the following to answer question: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI) Use Figure: Monopolistic Competition VI.In the figure,in the long run firms will:

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor producing where price is greater than marginal revenue?

Use the following to answer question: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V) Use Figure: Monopolistic Competition V.The figure illustrates a firm in the ___;in the _,the demand and marginal revenue curves will shift to the ___.

General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is initially in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that:

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Panel(s) _____ in the figure show(s) a monopolistic competitor earning a loss in the short run.

General Snacks is a typical firm in a market characterized by monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the short run the price of snacks will _ and the market output of snacks will _.

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor in long-run equilibrium?

Use the following to answer question: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.In panel (A) of the figure,the profit-maximizing price and quantity are _ and _.

Use the following to answer question: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.A firm in monopolistic competition will maximize profits by producing so that:

Use the following to answer question: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.In monopolistic competition,long-run equilibrium is characterized by:

Use the following to answer question: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI) Use Figure: Monopolistic Competition VI.The figure illustrates a firm in the ___;in the _,the demand and marginal revenue curves will shift to the ___.

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor earning a profit in the short run?

(Figure: Monopolistic Competition IV) Use Figure: Monopolistic Competition IV.The firm in the figure is producing at the output level that maximizes profits (minimizes losses) .The shaded rectangle represents the firm's: Figure: Monopolistic Competition IV

Quiz 15: Monopolistic Competition and Product Differentiation

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby,along with every other deli in town,is producing the quantity that minimizes average total cost.Assuming the delis are maximizing profits,the:

Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby is producing the quantity that minimizes his average total cost.Assuming that Toby is maximizing profits,his:

Use the following to answer question: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V) Use Figure: Monopolistic Competition V.In the figure,in the long run firms will:

Use the following to answer question: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI) Use Figure: Monopolistic Competition VI.In the figure,in the long run firms will:

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor producing where price is greater than marginal revenue?

Use the following to answer question: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V) Use Figure: Monopolistic Competition V.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____.

General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is initially in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that:

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Panel(s) _____ in the figure show(s) a monopolistic competitor earning a loss in the short run.

General Snacks is a typical firm in a market characterized by monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the short run the price of snacks will _____ and the market output of snacks will _____.

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor in long-run equilibrium?

Use the following to answer question: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.A firm in monopolistic competition will maximize profits by producing so that:

Use the following to answer question: Figure: Profit Maximization in Monopolistic Competition -(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.In monopolistic competition,long-run equilibrium is characterized by:

Use the following to answer question: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI) Use Figure: Monopolistic Competition VI.The figure illustrates a firm in the _____;in the _____,the demand and marginal revenue curves will shift to the _____.

Use the following to answer question: Figure: Monopolistic Competition II -(Figure: Monopolistic Competition II) Use Figure: Monopolistic Competition II.Which panel(s) in the figure show(s) a monopolistic competitor earning a profit in the short run?

(Figure: Monopolistic Competition IV) Use Figure: Monopolistic Competition IV.The firm in the figure is producing at the output level that maximizes profits (minimizes losses) .The shaded rectangle represents the firm's: Figure: Monopolistic Competition IV

Use the following to answer question: Figure: Monopolistic Competition V -(Figure: Monopolistic Competition V) Use Figure: Monopolistic Competition V.The figure illustrates a firm in the ___;in the _,the demand and marginal revenue curves will shift to the ___.

General Snacks is a typical firm in a market characterized by monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.In the short run the price of snacks will _ and the market output of snacks will _.

Use the following to answer question: Figure: Monopolistic Competition VI -(Figure: Monopolistic Competition VI) Use Figure: Monopolistic Competition VI.The figure illustrates a firm in the ___;in the _,the demand and marginal revenue curves will shift to the ___.