Question 1

In monopolistic competition, each firm's marginal revenue curve has a ________ and its demand curve has a ________.

Accepted Answer

A)   slope equal to zero; slope equal to zero
B)   slope equal to zero; negative slope
C)   negative slope; a slope equal to zero
D)   negative slope; negative slopeE) B) and D)
F) A) and B)

Question 2

In long-run equilibrium, a firm in monopolistic competition makes

Accepted Answer

A)   an economic profit but the economic profit is less than it would be if the firm was a monopoly.
B)   an economic profit that is higher than what it would be if the firm was a monopoly.
C)   zero economic profit.
D)   an economic profit that is the same amount as it would be if the firm was a monopoly.E) None of the above
F) A) and B)

Question 3

In the long-run, a firm in monopolistic competition has

Accepted Answer

A)   a price that exceeds its average total cost.
B)   a price that exceeds its marginal cost.
C)   an average total cost that exceeds its price.
D)   a marginal cost that exceeds its price.E) C) and D)
F) A) and B)

Question 4

In monopolistic competition, in the long run firms have

Accepted Answer

A)   a capacity shortage.
B)   excess capacity.
C)   an economic profit.
D)   an economic loss.E) B) and D)
F) A) and D)

Question 5

-In the above figure, the monopolistically competitive firm makes an economic profit of

Accepted Answer

A)   $0.
B)   between $0 and $50 per day.
C)   between $50.01 and $100 per day.
D)   greater than $100.01 per day.E) A) and B)
F) A) and C)

Question 6

Monopolistic competition is a market structure in which

Accepted Answer

A)   a small number of firms compete.
B)   each firm produces an identical product.
C)   firms compete on product quality, price, and marketing.
D)   there are barriers to entry.E) None of the above
F) A) and D)

Question 7

A monopolistically competitive firm can increase its economic profit by ________.

Accepted Answer

A)   developing new products
B)   producing at the efficient quantity
C)   eliminating excess capacity
D)   advertising lessE) All of the above
F) B) and C)

Question 8

In monopolistic competition, firms compete on product quality, price and marketing.

Accepted Answer

A) True 
 B)False

Question 9

In the short run, for a firm in monopolistic competition

Accepted Answer

A)   the firm's economic profit must equal zero.
B)   marginal revenue exceeds marginal cost.
C)   price exceeds marginal cost.
D)   the firm is a price taker.E) All of the above
F) B) and C)

Question 10

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

Accepted Answer

A)   zero
B)   between $1 and $700
C)   between $701 and $900
D)   more than $901E) B) and D)
F) None of the above

Question 11

In the long run, a firm in monopolistic competition has its price equal to ________ and also has its price ________.

Accepted Answer

A)   marginal cost; exceeding its average total cost.
B)   marginal cost; equal to its average total cost
C)   average total cost; exceeds its marginal cost
D)   average total cost; less than its marginal costE) B) and C)
F) A) and B)

Question 12

In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.

Accepted Answer

A)   below; barriers to entry
B)   below; product differentiation
C)   above; barriers to entry
D)   above; product differentiationE) C) and D)
F) A) and B)

Question 13

Monopolistic competition differs from monopoly because in monopolistic competition

Accepted Answer

A)   there are many firms.
B)   there are no close substitutes for each firm's product.
C)   the firms compete only on price.
D)   None of the above are differences between monopoly and monopolistically competitive firms.E) B) and C)
F) A) and C)

Question 14

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?

Accepted Answer

A)   monopolistic competition
B)   monopoly
C)   oligopoly
D)   perfect competitionE) All of the above
F) A) and D)

Question 15

Which of the following statements is FALSE concerning monopolistic competition?

Accepted Answer

A)   There are many firms.
B)   Firms sell a differentiated product.
C)   Each firm's actions influence rival firms.
D)   Firms are free to enter and exit.E) A) and B)
F) A) and C)

Question 16

Which of the following is NOT true of firms in monopolistic competition?

Accepted Answer

A)   They are price takers.
B)   They practice product differentiation.
C)   They have excess capacity in the long run.
D)   They earn a normal profit in the long run.E) None of the above
F) B) and D)

Question 17

In the short run, a firm in monopolistic competition produces where P = MC.

Accepted Answer

A) True 
 B)False

Question 18

What is a firm's markup? What does it show?

Accepted Answer

A firm's markup is the amount ...

Question 19

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's economic profit in the long run is

Accepted Answer

A)   zero.
B)   $600.
C)   $900.
D)   $2,400.E) A) and B)
F) None of the above

Question 20

A firm in monopolistic competition can determine what price to charge for its product because of

Accepted Answer

A)   barriers to entry.
B)   economies of scale.
C)   product differentiation.
D)   the fact there are many buyers.E) A) and B)
F) None of the above

Exam 14: Monopolistic Competition

-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. The firm's economic profit in the long run is

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Which of the following statements is FALSE concerning monopolistic competition?

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-In the above figure, the monopolistically competitive firm makes an economic profit of

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In the short run, for a firm in monopolistic competition

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Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?

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In monopolistic competition, each firm's marginal revenue curve has a ________ and its demand curve has a ________.

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In monopolistic competition, each firm's marginal revenue curve lies ________ its demand curve because of ________.

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Which of the following is NOT true of firms in monopolistic competition?

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In the long-run, a firm in monopolistic competition has

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In long-run equilibrium, a firm in monopolistic competition makes

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-The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What is the firm's economic profit per day?

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In the short run, a firm in monopolistic competition produces where P = MC.

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Monopolistic competition is a market structure in which

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What is a firm's markup? What does it show?

Correct AnswerverifiedA firm's markup is the amount ...View AnswerShow Answer

A firm in monopolistic competition can determine what price to charge for its product because of

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Monopolistic competition differs from monopoly because in monopolistic competition

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In monopolistic competition, firms compete on product quality, price and marketing.

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In the long run, a firm in monopolistic competition has its price equal to ________ and also has its price ________.

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A monopolistically competitive firm can increase its economic profit by ________.

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In monopolistic competition, in the long run firms have

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In monopolistic competition, each firm's marginal revenue curve has a and its demand curve has a .

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In monopolistic competition, each firm's marginal revenue curve lies its demand curve because of .

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A firm's markup is the amount ...
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In the long run, a firm in monopolistic competition has its price equal to and also has its price .

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