Question 1

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

A)  Input prices
B)  Consumer tastes
C)  Chance events
D)  Product differentiationE) B) and C)
F) B) and D)

Question 2

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

Accepted Answer

A) True 
 B)False

Question 3

What is the result when new firms are encouraged to enter a monopolistically competitive market?

Accepted Answer

A)  Some existing firms must be earning economic profits.
B)  They do so because there is insufficient product differentiation.
C)  The demand curve facing an existing firm shifts to the right.
D)  The marginal cost curve facing an existing firm shifts downwards.E) B) and C)
F) C) and D)

Question 4

Figure 10.17 f units and not Qg units, which has a lower average cost of production? A) Although its average cost of production is lower when the firm produces Qg units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss. B) At Qg, average cost exceeds marginal cost so the firm will actually incur a loss. C) At Qg, marginal revenue is less than average revenue, which will result in a loss for the firm. D) The firm's goal is to charge a high price and make a small profit rather than charge a low price and make no profit." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10.17.In the long run, why will the firm produce Qf units and not Qg units, which has a lower average cost of production?

Accepted Answer

A)  Although its average cost of production is lower when the firm produces Qg units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss.
B)  At Qg, average cost exceeds marginal cost so the firm will actually incur a loss.
C)  At Qg, marginal revenue is less than average revenue, which will result in a loss for the firm.
D)  The firm's goal is to charge a high price and make a small profit rather than charge a low price and make no profit.E) A) and D)
F) All of the above

Question 5

Why are many companies concerned about brand management?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Firms are concerned about bran...

Question 6

One goal a firm tries to achieve when it advertises a product is to

Accepted Answer

A)  make the demand curve for the product more elastic.
B)  shift the demand curve for the product to the left.
C)  make the demand curve for the product unitary elastic.
D)  make the demand curve for the product more inelastic.E) A) and C)
F) C) and D)

Question 7

Figure 10.17 f units B) Qg units C) Qh units D) Qj units" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 10.17.The productively efficient output for the firm represented in the diagram is

Accepted Answer

A)  Qf units
B)  Qg units
C)  Qh units
D)  Qj unitsE) A) and D)
F) B) and D)

Question 8

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

Accepted Answer

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.E) B) and D)
F) A) and D)

Question 9

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

The owner or manager of a firm that has ...

Question 10

Which is true about the demand curve of a monopolistically competitive firm?

Accepted Answer

A)  Is horizontal because the firm must cut its price to sell more.
B)  Is perfectly elastic.
C)  Is downward sloping because it sells an identical product.
D)  Is downward sloping because it must cut its price to sell more.E) A) and D)
F) A) and C)

Question 11

Excess capacity is a characteristic of monopolistically competitive firms.What does excess capacity mean?

Accepted Answer

A)  It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves.
B)  It means that firms hire more than the minimum number of workers needed to produce the profit-maximising level of output.
C)  It means that firms produce with inefficient combinations of resources.
D)  It means that firms build plants that are not large enough to achieve minimum efficient scale.E) B) and D)
F) All of the above

Question 12

The profit-maximising rule for a monopolistically competitive firm is

Accepted Answer

A)  to produce a quantity that maximises market share
B)  to produce a quantity that maximises total revenue
C)  to produce a quantity such that marginal revenue equals marginal cost
D)  to produce a quantity such that price equals marginal costE) C) and D)
F) B) and D)

Question 13

What are the most important differences between perfectly competitive markets and monopolistically competitive markets?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

In both perfectly competitive and monopo...

Question 14

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Accepted Answer

A)  Price, average revenue, and marginal revenue are all equal.
B)  Price, average revenue, and marginal revenue are all different.
C)  Price equals average revenue but is greater than marginal revenue.
D)  Price equals average revenue but is less than marginal revenue.E) All of the above
F) None of the above

Question 15

A monopolistically competitive industry that earns economic profits in the short run will

Accepted Answer

A)  continue to earn economic profits in the long run.
B)  experience the entry of new rival firms into the industry in the long run.
C)  experience the exit of existing firms out of the industry in the long run.
D)  experience a rise in demand in the long run.E) B) and D)
F) B) and C)

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

Excess capacity is a characteristic of monopolistically competitive firms.What does excess capacity mean?

Correct Answer
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Which of the following is true for a firm with a downward-sloping demand curve for its product?

Correct Answer
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Figure 10.17 -Refer to Figure 10.17.The productively efficient output for the firm represented in the diagram is

Correct Answer
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Which is true about the demand curve of a monopolistically competitive firm?

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

Correct Answer
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Correct Answer
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The owner or manager of a firm that has ...
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What is the result when new firms are encouraged to enter a monopolistically competitive market?

Correct Answer
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A monopolistically competitive industry that earns economic profits in the short run will

Correct Answer
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Correct Answer
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In both perfectly competitive and monopo...
View Answer

One goal a firm tries to achieve when it advertises a product is to

Correct Answer
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Figure 10.17 -Refer to Figure 10.17.In the long run, why will the firm produce Q_f units and not Q_gunits, which has a lower average cost of production?

Correct Answer
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The profit-maximising rule for a monopolistically competitive firm is

Correct Answer
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Why are many companies concerned about brand management? __________________________________________________________________________________________________________________________________________________________________________________________

Correct Answer
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Firms are concerned about bran...
View Answer

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

Correct Answer
verified

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?

Correct Answer
verified

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

Excess capacity is a characteristic of monopolistically competitive firms.What does excess capacity mean?

Correct AnswerverifiedShow Answer

Which of the following is true for a firm with a downward-sloping demand curve for its product?

Correct AnswerverifiedShow Answer

Figure 10.17 -Refer to Figure 10.17.The productively efficient output for the firm represented in the diagram is

Correct AnswerverifiedShow Answer

Which is true about the demand curve of a monopolistically competitive firm?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe owner or manager of a firm that has ...View AnswerShow Answer

What is the result when new firms are encouraged to enter a monopolistically competitive market?

Correct AnswerverifiedShow Answer

A monopolistically competitive industry that earns economic profits in the short run will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn both perfectly competitive and monopo...View AnswerShow Answer

One goal a firm tries to achieve when it advertises a product is to

Correct AnswerverifiedShow Answer

Figure 10.17 -Refer to Figure 10.17.In the long run, why will the firm produce Qf units and not Qg units, which has a lower average cost of production?

Correct AnswerverifiedShow Answer

The profit-maximising rule for a monopolistically competitive firm is

Correct AnswerverifiedShow Answer

Why are many companies concerned about brand management? __________________________________________________________________________________________________________________________________________________________________________________________

Correct AnswerverifiedFirms are concerned about bran...View AnswerShow Answer

Monopolistically competitive firms achieve allocative efficiency but not productive efficiency.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The owner or manager of a firm that has ...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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In both perfectly competitive and monopo...
View Answer

Correct Answer
verified

Figure 10.17 -Refer to Figure 10.17.In the long run, why will the firm produce Q_f units and not Q_gunits, which has a lower average cost of production?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Firms are concerned about bran...
View Answer

Correct Answer
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Correct Answer
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