Question 1

Figure 16-11 
-Refer to Figure 16-11. If this firm profit-maximizes, how much revenue will it earn?

Accepted Answer

The answer of Figure 16-11 
-Refer to Figure 16-11. If...

Question 2

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. Efficient scale is reached

Accepted Answer

A)  at 100 units.
B)  between 100 and 133.33 units.
C)  at 133.33 units.
D)  beyond 133.33 units.E) None of the above
F) All of the above

Question 3

Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

Accepted Answer

A) True 
 B)False

Question 4

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. Efficient scale is reached

Accepted Answer

A)  at 100 units.
B)  at 133.33 units.
C)  between 133.33 units and 154.92 units.
D)  at 154.92 units.E) A) and C)
F) None of the above

Question 5

Figure 16-12 
-Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

Accepted Answer

The answer of Figure 16-12 
-Refer to Figure 16-12. When...

Question 6

Figure 16-11 
-Refer to Figure 16-11. If this firm profit-maximizes, what price will it charge?

Accepted Answer

The answer of Figure 16-11 
-Refer to Figure 16-11. If...

Question 7

Which of the following is not a characteristic of monopolistic competition?

Accepted Answer

A)  a large number of sellers
B)  firms are price takers
C)  free entry into the market
D)  a differentiated productE) None of the above
F) C) and D)

Question 8

The market structure in which each firm has a monopoly over the product it makes, but many other firms make similar products that compete for the same customers is called

Accepted Answer

monopolist...

Question 9

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry. 
-Refer to Table 16-2. Which industry is the most competitive?

Accepted Answer

A)  Industry J
B)  Industry K
C)  Industry L
D)  Industry ME) B) and C)
F) All of the above

Question 10

As new firms enter a monopolistically competitive market, profits of existing firms

Accepted Answer

A)  rise, and product diversity in the market increases.
B)  rise, and product diversity in the market decreases.
C)  decline, and product diversity in the market increases.
D)  decline, and product diversity in the market decreases.E) C) and D)
F) All of the above

Question 11

A similarity between monopoly and monopolistic competition is that in both market structures

Accepted Answer

A)  strategic interactions among sellers are important.
B)  there are a small number of sellers.
C)  sellers are price makers rather than price takers.
D)  there are only a few buyers but many sellers.E) None of the above
F) A) and B)

Question 12

Figure 16-4 
-Refer to Figure 16-4. At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total revenue of approximately

Accepted Answer

A)  $12,000.
B)  $21,000.
C)  $24,000.
D)  $27,300.E) A) and B)
F) A) and C)

Question 13

AllClean knows that it produces and sells very effective laundry detergent. NotQuiteWhite knows that it produces and sells ineffective laundry detergent. According to the signaling theory of advertising,

Accepted Answer

A)  both AllClean and NotQuiteWhite have incentives to spend large amounts of money on advertising their products.
B)  AllClean has an incentive to spend a large amount of money on advertising its detergent, but NotQuiteWhite does not.
C)  NotQuiteWhite has an incentive to spend a large amount of money on advertising its detergent, but AllClean does not.
D)  neither AllClean nor NotQuiteWhite has an incentive to spend a large amount of money on advertising their detergents.E) All of the above
F) None of the above

Question 14

Which type of market structure has the fewest number of firms?

Accepted Answer

The answer of Which type of market structure has the...

Question 15

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

Accepted Answer

A) True 
 B)False

Question 16

A firm operating in a monopolistically competitive market can earn economic profits in

Accepted Answer

A)  the short run but not in the long run.
B)  the long run but not in the short run.
C)  both the short run and the long run.
D)  neither the short run nor the long run.E) A) and B)
F) All of the above

Question 17

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. 
-Refer to Table 16-7. If the firm has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

Accepted Answer

A)  3 units
B)  4 units
C)  5 units
D)  6 unitsE) A) and D)
F) B) and C)

Question 18

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. 
-Refer to Table 16-3. Which industry has the lowest concentration ratio?

Accepted Answer

A)  Industry A
B)  Industry B
C)  Industry C
D)  Industry DE) A) and B)
F) All of the above

Question 19

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Accepted Answer

business-s...

Question 20

Which of the following is not a key feature of monopolistic competition?

Accepted Answer

A)  Excess capacity
B)  A markup of price over marginal cost
C)  Positive economic profits for firms in the long run
D)  Differentiated products among firms in the marketE) None of the above
F) A) and B)

Exam 16: Monopolistic Competition

A similarity between monopoly and monopolistic competition is that in both market structures

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A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

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The market structure in which each firm has a monopoly over the product it makes, but many other firms make similar products that compete for the same customers is called

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As new firms enter a monopolistically competitive market, profits of existing firms

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Figure 16-12 -Refer to Figure 16-12. When this firm profit-maximizes, what is the amount of the firm's profit or loss?

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Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

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AllClean knows that it produces and sells very effective laundry detergent. NotQuiteWhite knows that it produces and sells ineffective laundry detergent. According to the signaling theory of advertising,

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Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much revenue will it earn?

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Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, what price will it charge?

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Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. Efficient scale is reached

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Which of the following is not a characteristic of monopolistic competition?

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Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry is the most competitive?

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Which type of market structure has the fewest number of firms?

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Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3. Which industry has the lowest concentration ratio?

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Table 16-7 A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. -Refer to Table 16-7. If the firm has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit?

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A firm operating in a monopolistically competitive market can earn economic profits in

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Which of the following is not a key feature of monopolistic competition?

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Economists who argue that advertising enhances market efficiency suggest that celebrity advertising signals inferior product quality.

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Figure 16-4 -Refer to Figure 16-4. At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total revenue of approximately

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Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. Efficient scale is reached

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