Question 1

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

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Question 2

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

Accepted Answer

A monopolistically competitive firm can differentiate its product through branding, packaging, features, and/or advertising to make it stand out from competitors and appeal to consumers' preferences, ultimately convincing them of its value.

Question 3

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

If a firm has lower average costs, it can sell its product at a lower price and still make a profit, which will make it more competitive in the market and can lead to higher demand for its product. This can result in higher economic profit for the firm.

Question 4

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, natural disasters, and government policies, and are therefore uncontrollable by the firm. The other options, such as product differentiation, cost structure, and managerial competence, can be controlled or improved upon by the firm itself.

Question 5

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 can play a significant role in the success or failure of a business.

Accepted Answer

Sheer chance can indeed play a significant role in the success or failure of a business, as unforeseen events and circumstances can impact business outcomes.

Question 6

The marketing of the first ballpoint 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

The marketing of the first ballpoint by Milton Reynolds showed that being the first firm to market a product may not lead to a long-lived advantage over later entrants into the market. This is because later entrants can learn from the first mover's mistakes, improve on their design, and offer their product at a lower price. Therefore, being the first mover does not necessarily guarantee a sustainable competitive advantage.

Question 7

Article Summary
As a part of its 2013 marketing campaign, the Greater Fort Lauderdale Convention & Visitors Bureau (CVB) set its sights on increasing travel to the region by with promotions to the lesbian, gay, bisexual and transgender community (LGBT). From August through November, the CVB has events scheduled across the United States and globally in an effort to attract a larger share of this travel segment. According to the CVB, Fort Lauderdale is the state's largest and most popular diverse gay capital, and their marketing efforts helped attract 1.2 million LGBT tourists who spent $1.4 billion in 2012.
Source: Arlene Satchell, "Lauderdale CVB ramps up LGBT summer marketing," Sun Sentinel, June 29, 2013.
-Refer to the Article Summary. By marketing to the LGBT community, Fort Lauderdale and the CVB are trying to set the city apart from competing travel destinations. 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

The strategy of marketing to the LGBT community is an example of product differentiation, as the CVB is using promotions and events to set Fort Lauderdale apart from other travel destinations and appeal to a specific segment of travelers.

Question 8

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 that come with being the first to sell a particular good are known as first-mover advantages. These can include things like brand awareness, patent protection, and economies of scale.

Question 9

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 10

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 a strategy used by firms to create unique products or services that are different from their competitors. By doing so, they are offering additional value to consumers which can help the firm to gain a competitive advantage. Managers or owners have control over the product differentiation strategy, making it a factor they can control to create value for consumers.

Question 11

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

Accepted Answer

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Question 12

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

Accepted Answer

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Question 13

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 is free entry and exit, meaning that new restaurants can easily enter the market if they see an opportunity for profit. This eliminates the possibility of long-term economic profits for any one restaurant. However, each restaurant can differentiate its product from others through branding, unique flavors and ambiance, among other things. Therefore, a successful new restaurant can earn zero economic profit in the long run while offering something unique to attract customers. Option A is incorrect because monopolistically competitive markets do not have barriers to entry; that is one of the defining characteristics of such a market structure. Option C is incorrect because health and safety regulations apply to all restaurants and do not necessarily create entry barriers. Option D is incorrect because obtaining a trademark does not ensure a profit, as other restaurants can still offer similar products under different names or branding.

Question 14

The most important of the factors that make a firm successful and that can be controlled by the firm's owners and managers 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 its products and the production of products at a lower average cost than competing firms are key factors that make a firm successful. These two factors allow a firm to offer unique products that consumers are willing to pay for while also being able to produce those products at a lower cost, which results in higher profit margins. The establishment of trademarks and lobbying government to erect or enforce entry barriers can be helpful, but they are not the most important factors that make a firm successful and may not be entirely controlled by the firm's owners and managers. The selection of prices and employees is also important, but they are not the most important factors as they are dependent on the firm's ability to differentiate its products and produce them efficiently.

Question 15

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

Accepted Answer

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Question 16

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 view the products of different sellers as nearly identical, they will be more likely to switch easily between those sellers based on small differences in price, quality, or other factors. This means that each seller's demand is relatively elastic - that is, a small change in price or other factors will lead to a larger change in the quantity demanded.

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

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

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

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

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?

The marketing of the first ballpoint by Milton Reynolds showed

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?

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?

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.

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

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

In a monopolistically competitive market, a successful new restaurant

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

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

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.