Question 1

Advertising that uses celebrity endorsements is most likely intended to

Accepted Answer

A)  increase elasticity of demand for the advertised product.
B)  reduce the ability of markets to allocate resources efficiently.
C)  provide a signal of product quality.
D)  be useful only for psychological effects.E) A) and D)
F) B) and C)

Question 2

In which of the following product markets are we likely to observe the largest amount of advertising?

Accepted Answer

A)  markets with highly differentiated products
B)  perfectly competitive markets
C)  markets in which industrial products are sold
D)  markets in which there is very little difference between different firms' productsE) B) and C)
F) None of the above

Question 3

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. The firm's maximum profit is

Accepted Answer

A)  $-5,000.00.
B)  $0.
C)  $5,000.00.
D)  $8,887.78.E) A) and D)
F) B) and C)

Question 4

One way in which monopolistic competition differs from oligopoly is that

Accepted Answer

A)  there are no barriers to entry in oligopolies.
B)  in oligopoly markets there are only a few sellers.
C)  all firms in an oligopoly eventually earn zero economic profits.
D)  strategic interactions between firms are rare in oligopolies.E) A) and B)
F) A) and C)

Question 5

Scenario 16-2
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-2. If the marginal cost of producing this good is 4, how much total consumer surplus would consumers receive in this market?

Accepted Answer

A)  8
B)  12
C)  32
D)  64E) B) and C)
F) A) and D)

Question 6

A typical firm in the US economy would be classified as

Accepted Answer

A)  perfectly competitive.
B)  imperfectly competitive.
C)  a duopolist.
D)  an oligopolist.E) All of the above
F) B) and D)

Question 7

Which of the following statements is not correct?

Accepted Answer

A)  The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
B)  Monopolistically competitive firms advertise in order to increase the elasticity of the demand curve they face.
C)  Expensive advertising might help consumers if it is a signal that the product is good.
D)  Brand names acquired at great cost might help consumers by assuring quality.E) All of the above
F) B) and D)

Question 8

Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to

Accepted Answer

A)  decrease and average total cost to increase.
B)  decrease and average total cost to decrease.
C)  remain unchanged as Joe's is doing the best it can.
D)  increase and average total costs to decrease.E) A) and C)
F) None of the above

Question 9

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Accepted Answer

A)  industrial products.
B)  homogeneous products.
C)  consumer goods for which there are no close substitutes.
D)  highly-differentiated consumer goods.E) A) and B)
F) All of the above

Question 10

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Accepted Answer

A) True 
 B)False

Question 11

Economists measure a market's domination by a small number of firms with a statistic called the

Accepted Answer

concentrat...

Question 12

Under which of the following market structures would the highest output of a particular good be produced?

Accepted Answer

A)  perfect competition
B)  monopolistic competition
C)  oligopoly
D)  monopolyE) C) and D)
F) A) and B)

Question 13

As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Accepted Answer

Brand-name hotels are a critic...

Question 14

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 produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is correct?

Accepted Answer

A)  This firm is operating at its efficient scale.
B)  This firm should expect its demand curve to shift to the left.
C)  Firms will leave the market and profits for firms that remain in the market will rise.
D)  This firm is in a long-run equilibrium.E) A) and D)
F) A) and B)

Question 15

A monopolistically competitive market

Accepted Answer

A)  is imperfectly competitive, and all imperfectly competitive markets are monopolistically competitive.
B)  is imperfectly competitive, but not all imperfectly competitive markets are monopolistically competitive.
C)  is imperfectly competitive, whereas an oligopolistic market is not imperfectly competitive.
D)  is not imperfectly competitive.E) All of the above
F) B) and C)

Question 16

A monopolistically competitive market could be considered inefficient because

Accepted Answer

A)  marginal revenue exceeds average revenue.
B)  price exceeds marginal cost.
C)  the efficient scale of production is only achieved in the long run, not in the short run.
D)  markup pricing does not occur in any other market structure.E) A) and C)
F) A) and B)

Question 17

A monopolistically competitive firm has the following cost structure:  The firm faces the following demand curve:  To maximize profit (or minimize losses) , the firm will produce

Accepted Answer

A)  20 units.
B)  30 units.
C)  40 units.
D)  50 units.E) B) and C)
F) A) and D)

Question 18

When a monopolistically competitive firm is in long-run equilibrium,

Accepted Answer

A)  price is equal to average total cost.
B)  price is equal to marginal cost.
C)  price is equal to marginal revenue.
D)  the firm operates at its efficient scale.E) All of the above
F) B) and D)

Question 19

Monopolistic competition is characterized by which of the following attributes? (i) 
Free entry
(ii) 
Product differentiation
(iii) 
Many sellers

Accepted Answer

A)  (i)  and (iii)  only
B)  (i)  and (ii)  only
C)  (ii)  and (iii)  only
D)  (i) , (ii) , and (iii) E) A) and B)
F) B) and D)

Question 20

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. What is the concentration ratio for Industry M?

Accepted Answer

A)  about 96%
B)  about 52%
C)  about 40%
D)  about 22%E) A) and C)
F) All of the above

Exam 16: Monopolistic Competition

Which of the following statements is not correct?

Correct Answer
verified

Economists measure a market's domination by a small number of firms with a statistic called the

Correct Answer
verified
concentrat...
View Answer

A monopolistically competitive market

Correct Answer
verified

One way in which monopolistic competition differs from oligopoly is that

Correct Answer
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The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Correct Answer
verified

Under which of the following market structures would the highest output of a particular good be produced?

Correct Answer
verified

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. What is the concentration ratio for Industry M?

Correct Answer
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Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct Answer
verified

In which of the following product markets are we likely to observe the largest amount of advertising?

Correct Answer
verified

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

Correct Answer
verified

When a monopolistically competitive firm is in long-run equilibrium,

Correct Answer
verified

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: To maximize profit (or minimize losses) , the firm will produce

Correct Answer
verified

Monopolistic competition is characterized by which of the following attributes? (i) Free entry (ii) Product differentiation (iii) Many sellers

Correct Answer
verified

Advertising that uses celebrity endorsements is most likely intended to

Correct Answer
verified

Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to

Correct Answer
verified

As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Correct Answer
verified
Brand-name hotels are a critic...
View Answer

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 4, how much total consumer surplus would consumers receive in this market?

Correct Answer
verified

A typical firm in the US economy would be classified as

Correct Answer
verified

A monopolistically competitive market could be considered inefficient because

Correct Answer
verified

Correct Answer
verified

Exam 16: Monopolistic Competition

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Economists measure a market's domination by a small number of firms with a statistic called the

Correct Answerverifiedconcentrat...View AnswerShow Answer

A monopolistically competitive market

Correct AnswerverifiedShow Answer

One way in which monopolistic competition differs from oligopoly is that

Correct AnswerverifiedShow Answer

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Correct AnswerverifiedShow Answer

Under which of the following market structures would the highest output of a particular good be produced?

Correct AnswerverifiedShow Answer

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. What is the concentration ratio for Industry M?

Correct AnswerverifiedShow Answer

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Correct AnswerverifiedShow Answer

In which of the following product markets are we likely to observe the largest amount of advertising?

Correct AnswerverifiedShow Answer

Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. The firm's maximum profit is

Correct AnswerverifiedShow Answer

When a monopolistically competitive firm is in long-run equilibrium,

Correct AnswerverifiedShow Answer

A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve: To maximize profit (or minimize losses) , the firm will produce

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by which of the following attributes? (i) Free entry (ii) Product differentiation (iii) Many sellers

Correct AnswerverifiedShow Answer

Advertising that uses celebrity endorsements is most likely intended to

Correct AnswerverifiedShow Answer

Joe's Juice Shop operates in a monopolistically competitive market. Joe's is currently producing where its average total cost is minimized. In the long run we would expect Joe's output to

Correct AnswerverifiedShow Answer

As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Correct AnswerverifiedBrand-name hotels are a critic...View AnswerShow Answer

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 4, how much total consumer surplus would consumers receive in this market?

Correct AnswerverifiedShow Answer

A typical firm in the US economy would be classified as

Correct AnswerverifiedShow Answer

A monopolistically competitive market could be considered inefficient because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
concentrat...
View 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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Brand-name hotels are a critic...
View 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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