Question 1

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?

Accepted Answer

First-mover advantages refer to the benefits a company gains by being the first to enter a new market or develop a new product or service.

Question 2

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

Accepted Answer

In a monopolistically competitive market, if consumers perceive products from different sellers as similar, they are more willing to switch between sellers based on price changes, making the demand for each seller's product more elastic.

Question 3

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?

Accepted Answer

Product differentiation is a controllable factor because firms can actively decide how to differentiate their products from competitors through innovation, quality, design, or marketing strategies.

Question 4

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 engage in product differentiation in order to attract customers by offering unique features or qualities that set their products apart from those of their competitors. This allows them to command a higher price and compete effectively in the market.

Question 5

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

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

Question 6

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 the firm can either charge a lower price and still make a profit, or charge a similar price to competitors and earn a higher profit margin. This gives the firm a competitive advantage in the market.

Question 7

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

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

Question 8

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?

Accepted Answer

Design flaws or problems with a new product can negatively affect the innovating firm by reducing profits for the new innovation and creating an opportunity for competitors to enter the market with a better product. This can result in the loss of market share and decreased profitability for the innovating firm. Although consumers may be forgiving initially, they are likely to switch to a better product if it becomes available. The cost of improving the product may also erode profits if the firm is unable to raise prices without alienating customers.

Question 9

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

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

Question 10

In a monopolistically competitive market, a successful new restaurant

Accepted Answer

In a monopolistically competitive market, there is free entry and exit, meaning that new restaurants can easily enter the market. As a result, existing restaurants cannot earn economic profits in the long run. However, they can differentiate their product to attract customers and potentially earn a higher price than their competitors. Therefore, option B is the correct choice. Options A, C, and D are incorrect because they suggest that barriers to entry exist, which is not the case in a monopolistically competitive market.

Question 11

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 in the market through unique features, design, quality, packaging, advertising, etc. This is a strategy under the control of the business manager or owner to add value to their product for consumers.

Question 12

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

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

Question 13

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?

Accepted Answer

Input prices are an example of an uncontrollable factor as firms have little control over the prices of raw materials or labor. The other options - product differentiation, producing at a lower average total cost than competing firms, and hiring competent managers - are factors that a firm can control or influence to some extent.

Question 14

Which of the following statements is true?

Accepted Answer

Sheer chance, including unpredictable market changes or unforeseen opportunities, can significantly impact a business's success or failure, highlighting the role of external factors beyond a firm's control.

Question 15

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers are

Accepted Answer

The differentiation of products and achieving low average production costs are key factors that can be controlled by firm owners and managers. By differentiating products, a firm can create a unique value proposition and distinguish themselves from competitors. Producing at a lower average cost helps firms to operate more efficiently and increase profit margins. Trademark establishment and government lobbying can also contribute to a firm's success, but these factors are not entirely under the firm's control. Selection of pricing and productive employees are also important, but these do not necessarily set a firm apart from competitors or contribute to low production costs.

Quiz 10: Monopolistic Competition: The Competitive Model in a More Realistic