Question 1

The following graph shows a monopolistically competitive firm. Which of the following is the maximum amount of profit the firm could earn?Figure 9.1:

Accepted Answer

The answer of The following graph shows a monopolistically competitive...

Question 2

If the ice cream industry is monopolistically competitive, then:

Accepted Answer

In a monopolistically competitive industry, firms have some degree of market power and can set their own prices. However, they also face competition from other firms producing similar products. This means that in the short run, a firm will produce where marginal revenue equals marginal cost to maximize profits. Therefore, option B is correct as it describes the short-run equilibrium in a monopolistically competitive industry. Option A is incorrect because the price may not necessarily equal marginal revenue, and option C is incorrect because in the long run, firms in a monopolistically competitive industry will earn zero economic profit, meaning that the price will not necessarily equal marginal cost. Option D is also incorrect because there are no significant barriers to entering the ice cream business, as it is relatively easy to start producing ice cream. Option E is also incorrect because in the long run, firms in a monopolistically competitive industry will earn zero economic profit, meaning they will not earn economic profits.

Question 3

The following graph shows a monopolistically competitive firm. Which of the following is the total cost of the firm at the profit-maximizing level of output?Figure 9.1:

Accepted Answer

The answer of The following graph shows a monopolistically competitive...

Question 4

Monopolistic competition is common in:

Accepted Answer

Monopolistic competition is most commonly found in retail selling, such as clothing stores, restaurants, and small businesses. These industries have a large number of small firms competing with each other, but they differentiate themselves through unique product offerings or marketing strategies. Farming, basic manufacturing, electric power generation, and banking industries are generally more monopolistic or oligopolistic in nature.

Question 5

The following graphs show two firms operating in a monopolistically competitive market. The firm illustrated in Graph A maximizes profits by producing at a level of output _____ and charging a price _____.​Figure 9.2:

Accepted Answer

The answer of The following graphs show two firms operating...

Question 6

When free entry is one of the attributes of a market structure, economic profits are:

Accepted Answer

When free entry is one of the attributes of a market structure, it means that new firms can easily enter the market, increasing competition. This results in existing firms not being able to earn economic profits in the long run, as new entrants will drive prices down and reduce profit margins. Therefore, the economic profits are generally driven to zero in the long run.

Question 7

Which of the following is not a source of product differentiation?

Accepted Answer

Differences in the cost of production of products do not directly contribute to product differentiation. While differences in cost may lead to variations in quality and materials used, these are often reflected in physical differences and other factors that can contribute to product differentiation.

Question 8

In a monopolistically competitive market, _____.

Accepted Answer

Monopolistically competitive markets involve a large number of firms selling differentiated products, meaning that each firm has some degree of market power over their product due to its unique characteristics or branding. This leads to firms facing downward-sloping demand curves, rather than perfectly elastic ones as in perfect competition, but these demand curves are not as steep as those faced by monopolies. In the long run, firms in monopolistically competitive markets may earn only normal profits as new firms enter and compete for market share, eroding each other's market power.

Question 9

Under monopolistic competition, _____.

Accepted Answer

Monopolistic competition is characterized by a large number of firms producing differentiated products, which means that there are few barriers to entry. In contrast, monopolies have significant barriers to entry as there is only one producer and oligopolies have a few large producers selling standardized or differentiated products. Perfectly elastic demand curves are only found in perfectly competitive markets, where many firms sell identical products.

Question 10

Suppose Billy sells burgers in Sierra Island and the market for fast-food burgers is monopolistically competitive. Which of the following is most likely to be true of Billy's burger stand at short-run equilibrium?

Accepted Answer

In a monopolistically competitive market, firms face a downward-sloping demand curve, meaning they have some control over the price of their product. This results in the marginal revenue curve lying below the demand curve because each additional unit sold lowers the price of all units sold.

Question 11

Which of the following conditions distinguishes perfect competition from monopolistic competition?

Accepted Answer

In perfect competition, all firms sell homogenous products, whereas in monopolistic competition, firms differentiate their products to some extent. The number of sellers, freedom of entry and exit, economic profits in the long run, and the slope of the market demand curve are conditions that apply to both perfect and monopolistic competition.

Question 12

In Rhode Island, there are a large number of qualified, primary-care physicians whose services are highly personalized. In addition to price, factors such as age, sex, location, and personality influence the choice of physicians. Thus, it can be said that the primary-care physician market is most probably a:

Accepted Answer

The fact that factors other than price, such as age, sex, location, and personality, influence the choice of physicians suggests that there is product differentiation in this market. This means that the primary-care physician market is most likely a monopolistically competitive market, which is characterized by many firms selling differentiated products. The existence of a large number of qualified, primary-care physicians further supports this conclusion.

Question 13

In a monopolistically competitive market, _____.

Accepted Answer

In a monopolistically competitive market, firms tend to differentiate their products from their competitors in order to create brand loyalty and build a customer base. This allows for some degree of pricing power, as consumers may be willing to pay slightly more for a product that they perceive as unique or of higher quality. However, the market is not dominated by a single firm, and there are relatively low barriers to entry, meaning that new firms can enter the market and compete on their own differentiated products. Therefore, firms in this market cannot be considered price takers, and there is no guarantee of economic profits in the long run.

Question 14

The following graph shows a monopolistically competitive firm. Which of the following is the total revenue of the firm at the profit-maximizing level of output?Figure 9.1:  ​

Accepted Answer

The answer of The following graph shows a monopolistically competitive...

Question 15

Monopolistic competition is characterized by:

Accepted Answer

Monopolistic competition involves a large number of firms selling differentiated products, meaning that each firm has some degree of market power and control over its price. This distinguishes it from perfect competition where all firms sell identical products and have no control over price, and from oligopoly where a small number of large firms dominate the market. There are relatively low barriers to entry in monopolistic competition, allowing for new firms to enter and compete with differentiated products.

Question 16

The restaurants in San Francisco can probably be categorized as examples of firms

Accepted Answer

The restaurants in San Francisco operate in a monopolistically competitive market. They offer differentiated products, such as different cuisines and atmospheres, but there are also many restaurants competing for customers' business. This competition leads to some market power for individual restaurants, but there are low barriers to entry, meaning new restaurants can enter the market relatively easily.

Question 17

In a monopolistically competitive market structure, because each good sold in the market is _____, each firm _____.

Accepted Answer

In a monopolistically competitive market structure, each good sold in the market is slightly different, meaning that firms have some degree of control over the price they charge for their product. Therefore, each firm is considered a price maker as they can set their prices based on the uniqueness of their product. However, this control is limited due to the presence of close substitutes in the market.

Question 18

Monopolistic competition is characterized by:

Accepted Answer

Monopolistic competition is characterized by firms earning zero economic profits in the long run due to the entry of new firms when existing firms are making profits, which eventually erodes these profits to zero.

Question 19

In monopolistically competitive markets, economic profits _____, which shifts the demand curve of the remaining firms to the _____.

Accepted Answer

In monopolistically competitive markets, economic profits attract new firms to enter the market, which increases competition and shifts the demand curve of the existing firms to the left as the market share of each firm decreases.

Question 20

In a monopolistically competitive industry, the competitive element results from _____ and the monopoly element results from _____.

Accepted Answer

In a monopolistically competitive industry, the competitive element comes from the presence of a large number of firms and the freedom of entry and exit in the market, while the monopoly element arises from each firm's ability to differentiate its product from those of its competitors.

Quiz 9: Monopolistic Competition and Oligopoly

The following graph shows a monopolistically competitive firm. Which of the following is the maximum amount of profit the firm could earn?Figure 9.1:

If the ice cream industry is monopolistically competitive, then:

The following graph shows a monopolistically competitive firm. Which of the following is the total cost of the firm at the profit-maximizing level of output?Figure 9.1:

Monopolistic competition is common in:

The following graphs show two firms operating in a monopolistically competitive market. The firm illustrated in Graph A maximizes profits by producing at a level of output _ and charging a price _.Figure 9.2:

When free entry is one of the attributes of a market structure, economic profits are:

Which of the following is not a source of product differentiation?

In a monopolistically competitive market, _____.

Under monopolistic competition, _____.

Suppose Billy sells burgers in Sierra Island and the market for fast-food burgers is monopolistically competitive. Which of the following is most likely to be true of Billy's burger stand at short-run equilibrium?

Which of the following conditions distinguishes perfect competition from monopolistic competition?

In a monopolistically competitive market, _____.

The following graph shows a monopolistically competitive firm. Which of the following is the total revenue of the firm at the profit-maximizing level of output?Figure 9.1:

Monopolistic competition is characterized by:

The restaurants in San Francisco can probably be categorized as examples of firms

In a monopolistically competitive market structure, because each good sold in the market is _, each firm _.

Monopolistic competition is characterized by:

In monopolistically competitive markets, economic profits _, which shifts the demand curve of the remaining firms to the _.

In a monopolistically competitive industry, the competitive element results from _ and the monopoly element results from _.

Quiz 9: Monopolistic Competition and Oligopoly

The following graph shows a monopolistically competitive firm. Which of the following is the maximum amount of profit the firm could earn?Figure 9.1:

If the ice cream industry is monopolistically competitive, then:

The following graph shows a monopolistically competitive firm. Which of the following is the total cost of the firm at the profit-maximizing level of output?Figure 9.1:

Monopolistic competition is common in:

The following graphs show two firms operating in a monopolistically competitive market. The firm illustrated in Graph A maximizes profits by producing at a level of output _____ and charging a price _____.​Figure 9.2:

When free entry is one of the attributes of a market structure, economic profits are:

Which of the following is not a source of product differentiation?

In a monopolistically competitive market, _____.

Under monopolistic competition, _____.

Suppose Billy sells burgers in Sierra Island and the market for fast-food burgers is monopolistically competitive. Which of the following is most likely to be true of Billy's burger stand at short-run equilibrium?

Which of the following conditions distinguishes perfect competition from monopolistic competition?

In a monopolistically competitive market, _____.

The following graph shows a monopolistically competitive firm. Which of the following is the total revenue of the firm at the profit-maximizing level of output?Figure 9.1: ​

Monopolistic competition is characterized by:

The restaurants in San Francisco can probably be categorized as examples of firms

In a monopolistically competitive market structure, because each good sold in the market is _____, each firm _____.

Monopolistic competition is characterized by:

In monopolistically competitive markets, economic profits _____, which shifts the demand curve of the remaining firms to the _____.

In a monopolistically competitive industry, the competitive element results from _____ and the monopoly element results from _____.

The following graphs show two firms operating in a monopolistically competitive market. The firm illustrated in Graph A maximizes profits by producing at a level of output _ and charging a price _.Figure 9.2:

The following graph shows a monopolistically competitive firm. Which of the following is the total revenue of the firm at the profit-maximizing level of output?Figure 9.1:

In a monopolistically competitive market structure, because each good sold in the market is _, each firm _.

In monopolistically competitive markets, economic profits _, which shifts the demand curve of the remaining firms to the _.

In a monopolistically competitive industry, the competitive element results from _ and the monopoly element results from _.