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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.

E) A) and B)
F) B) and C)

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Figure 10-16 Figure 10-16 -Refer to Figure 10-16 to answer the following questions. a.What is the profit-maximising output level? b.What is the profit-maximising price? c.What is the average total cost at the profit-maximising output level? d.What area represents the firm's profit? e.At which output level are economies of scale exhausted? f.Does this graph most likely represent the long run or the short run? Why? -Refer to Figure 10-16 to answer the following questions. a.What is the profit-maximising output level? b.What is the profit-maximising price? c.What is the average total cost at the profit-maximising output level? d.What area represents the firm's profit? e.At which output level are economies of scale exhausted? f.Does this graph most likely represent the long run or the short run? Why?

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a.The profit maximising level of output ...

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For a monopolistically competitive firm,marginal revenue


A) equals the price.
B) is greater than the price.
C) is less than the price.
D) and price are unrelated.

E) None of the above
F) A) and B)

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What is the trade-off that consumers face when buying the product of a monopolistically competitive firm?


A) Consumers pay higher prices but receive better quality goods compared to the output of perfectly competitive firms.
B) Consumers pay a price greater than marginal cost but have the luxury of choices more suited to their tastes.
C) Consumers pay higher prices but the products are produced by highly efficient firms.
D) Consumers pay lower prices but have fewer choices.

E) A) and C)
F) A) and B)

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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) True
B) False

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Figure 10-14 Figure 10-14 -Refer to Figure 10-14.Economies of scale are exhausted at which output level? A) Q<sub>1</sub> units B) Q<sub>2</sub> units C) Q<sub>3</sub> units D) more than Q<sub>1</sub><sub> </sub>units -Refer to Figure 10-14.Economies of scale are exhausted at which output level?


A) Q1 units
B) Q2 units
C) Q3 units
D) more than Q1 units

E) None of the above
F) A) and B)

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C

Figure 10-9 Figure 10-9 -Refer to Figure 10-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimising its losses? A) Panel A B) Panel B C) Panel C D) Panel A and Panel C -Refer to Figure 10-9.Which of the graphs in the figure depicts a monopolistically competitive firm that is minimising its losses?


A) Panel A
B) Panel B
C) Panel C
D) Panel A and Panel C

E) C) and D)
F) B) and D)

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Figure 10-4 Figure 10-4 Figure 10-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 10-4.What is the area that represents the loss made by the firm? A) the area P<sub>0</sub>adP<sub>3</sub> B) the area P<sub>1</sub>bcP<sub>2</sub> C) the area P<sub>0</sub>acP<sub>2</sub> D) the area P<sub>2</sub>cdP<sub>3</sub> Figure 10-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 10-4.What is the area that represents the loss made by the firm?


A) the area P0adP3
B) the area P1bcP2
C) the area P0acP2
D) the area P2cdP3

E) All of the above
F) A) and C)

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A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

A) True
B) False

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Table 10-3 Table 10-3 Table 10-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 10-3.What is the best course of action for the firm in the short run? A) It should shut down. B) It should stay in business because it covers some of its fixed cost. C) It should increase its sales by lowering its price. D) It should not cut its price,but it should increase its sales by advertising. Table 10-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 10-3.What is the best course of action for the firm in the short run?


A) It should shut down.
B) It should stay in business because it covers some of its fixed cost.
C) It should increase its sales by lowering its price.
D) It should not cut its price,but it should increase its sales by advertising.

E) A) and B)
F) A) and C)

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Marketing refers to all the activities necessary for a firm to sell a product to a consumer.

A) True
B) False

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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.

A) True
B) False

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True

Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?

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No.Although monopolistically competitive...

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If a firm has excess capacity,it means


A) that the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales.
B) that the firm is not producing its minimum efficient scale of output.
C) that the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity.
D) that the firm's quantity supplied exceeds its quantity demanded.

E) B) and C)
F) A) and D)

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In the long-run equilibrium,both the perfectly competitive firm and the monopolistically competitive firm produce the output at which MR = MC and charge a price equal to the average total cost of production.

A) True
B) False

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A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

A) True
B) False

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


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) A) and D)
F) B) and C)

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Table 10-4 Table 10-4 Table 10-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories. -Refer to Table 10-4.Victoria's profit-maximising output is where A) total profit equals $3. B) marginal revenue and marginal cost both equal $4. C) marginal revenue and marginal cost both equal $3. D) marginal cost is at its minimum value. Table 10-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company.Victoria sells plastic vials to university and private research laboratories. -Refer to Table 10-4.Victoria's profit-maximising output is where


A) total profit equals $3.
B) marginal revenue and marginal cost both equal $4.
C) marginal revenue and marginal cost both equal $3.
D) marginal cost is at its minimum value.

E) A) and B)
F) None of the above

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C

Sparkle,one of many firms in the market for toothpaste,is in long-run equilibrium.Sparkle has a small market share and has been in business for a long time. a.Identify the market structure in which Sparkle operates.Explain your answer. b.What is Sparkle's profit or loss? Explain your answer.If you cannot determine the profit or loss,explain what information is missing. c.Draw a diagram showing Sparkle's demand curve,marginal revenue curve,average total cost curve and marginal cost curve.Label your diagram.

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a.Monopolistic competition;pro...

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The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run.However,it is possible for a firm to continue to earn economic profits if the firm


A) expands its marketing budget.
B) adopts new technologies that enable it to lower its cost of production.
C) expands its product offerings to appeal to a wider range of consumers.
D) reduces its price to expand its market.

E) B) and C)
F) A) and D)

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