Question 1

Piper consumes Ragu spaghetti sauce exclusively. She claims that there is a clear taste difference and that competing brands of spaghetti sauce leave an unsavory taste in her mouth. However, in a blind taste test, Piper is found to prefer generic store-brand spaghetti sauce to Ragu spaghetti sauce eight out of ten times. The results of Piper's taste test would reinforce claims by critics of brand names that

Accepted Answer

A)  consumers are always willing to pay more for brand names.
B)  brand names cause consumers to perceive differences that do not really exist.
C)  brand names are always preferred to generics.
D)  consumers are only willing to buy generics if they are less expensive.E) None of the above
F) A) and C)

Question 2

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) C) and D)
F) None of the above

Question 3

Figure 16-1    
-Refer to Figure 16-1. Which of the graphs illustrates the demand curve most likely faced by a firm in a monopolistically competitive market?

Accepted Answer

A)  Panel A
B)  Panel B
C)  Panel C
D)  Panel DE) A) and B)
F) B) and C)

Question 4

For the economy as a whole, about what percentage of total firm revenue is spent on advertising?

Accepted Answer

The answer of For the economy as a whole, about...

Question 5

In a monopolistically competitive market,

Accepted Answer

A)  entry by new firms is impeded by barriers to entry; thus, the number of firms in the market is never ideal.
B)  entry by new firms is impeded by barriers to entry, but the number of firms in the market is nevertheless always ideal.
C)  free entry ensures that the number of firms in the market is ideal.
D)  there may be too few or too many firms in the market, despite free entry.E) B) and C)
F) B) and D)

Question 6

A firm in a monopolistically competitive market faces a

Accepted Answer

A)  downward-sloping demand curve because the firm's product is different from those offered by other firms.
B)  downward-sloping demand curve because there are only a few firms in the market.
C)  horizontal demand curve because there are many firms in the market.
D)  horizontal demand curve because firms can enter the market without restriction.E) None of the above
F) B) and C)

Question 7

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 16-4
Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition.
-Refer to Scenario 16-4. As a result of the new restaurant, diners in Boston are likely to experience a

Accepted Answer

A)  product-variety externality, which is a negative externality.
B)  product-variety externality, which is a positive externality.
C)  business-stealing externality, which is a negative externality.
D)  business-stealing externality, which is a positive externality.E) A) and D)
F) B) and D)

Question 9

Scenario 16-1
Suppose the following are the sales for all of the firms in two different industries. 
-Refer to Scenario 16-1. What are the concentration ratios for these industries?

Accepted Answer

A)  Industry A: 22%, Industry B: 26%
B)  Industry A: 41%, Industry B: 47%.
C)  Industry A: 68%, Industry B: 79%
D)  Industry A: 100%, Industry B: 100%.E) C) and D)
F) None of the above

Question 10

In a monopolistically competitive industry, a firm's demand curve also represent its

Accepted Answer

A)  marginal revenue.
B)  marginal cost.
C)  average revenue.
D)  profit.E) All of the above
F) C) and D)

Question 11

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 12

Product differentiation always leads to some measure of market power.

Accepted Answer

A) True 
 B)False

Question 13

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 K?

Accepted Answer

A)  about 8%
B)  about 36%
C)  about 48%
D)  about 84%E) None of the above
F) A) and B)

Question 14

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) B) and D)

Question 15

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. When the firm is maximizing its profit,

Accepted Answer

A)  TR = $9,000 and TC =$16,000.
B)  TR = $14,000 and TC =$16,000.
C)  TR = $16,000 and TC =$16,000.
D)  MC exceeds MR by $66.66 on the last unit of output produced.E) A) and B)
F) A) and C)

Question 16

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Accepted Answer

A)  price may exceed marginal revenue, but in the long run, price equals marginal revenue.
B)  price may exceed marginal cost, but in the long run, price equals marginal cost.
C)  price may exceed average total cost, but in the long run, price equals average total cost.
D)  there are many firms in the market, but in the long run, there are only a few firms in the market.E) None of the above
F) B) and D)

Question 17

A firm has the following cost structure:  ٍ
If this firm is in a typical perfectly competitive market, in the long run it will likely produce

Accepted Answer

A)  8 or fewer units of output.
B)  10 units of output.
C)  more than 10 units of output.
D)  None of the above are necessarily correct because there is not enough information to tell.E) A) and C)
F) C) and D)

Question 18

In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Accepted Answer

A)  enhance the social welfare of society.
B)  increase the number of fast-food restaurants.
C)  reduce barriers to entry in imperfect markets.
D)  reduce the competitive nature of local fast-food markets.E) None of the above
F) A) and D)

Question 19

Critics of advertising argue that advertising

Accepted Answer

A)  creates desires that otherwise might not exist.
B)  hinders competition.
C)  often fails to convey substantive information.
D)  All of the above are correct.E) A) and B)
F) A) and D)

Question 20

Of the following market structures, which are considered imperfectly competitive?
I.
Perfect competition
II.
Monopoly
III.
Monopolistic competition
IV.
Oligopoly

Accepted Answer

A)  III only
B)  II and III
C)  III and IV
D)  II, III, and IVE) A) and C)
F) A) and B)

Exam 16: Monopolistic Competition

Product differentiation always leads to some measure of market power.

Correct Answer
verified

Of the following market structures, which are considered imperfectly competitive? I. Perfect competition II. Monopoly III. Monopolistic competition IV. Oligopoly

Correct Answer
verified

Correct Answer
verified

In a monopolistically competitive industry, a firm's demand curve also represent its

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 K?

Correct Answer
verified

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Correct Answer
verified

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

Correct Answer
verified

Figure 16-1 -Refer to Figure 16-1. Which of the graphs illustrates the demand curve most likely faced by a firm in a monopolistically competitive market?

Correct Answer
verified

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Correct Answer
verified

Correct Answer
verified

A firm has the following cost structure: ٍ If this firm is in a typical perfectly competitive market, in the long run it will likely produce

Correct Answer
verified

For the economy as a whole, about what percentage of total firm revenue is spent on advertising?

Correct Answer
verified

Critics of advertising argue that advertising

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. What are the concentration ratios for these industries?

Correct Answer
verified

In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Correct Answer
verified

A firm in a monopolistically competitive market faces a

Correct Answer
verified

In a monopolistically competitive market,

Correct Answer
verified

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. When the firm is maximizing its profit,

Correct Answer
verified

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

Correct Answer
verified
monopolist...
View Answer

Exam 16: Monopolistic Competition

Product differentiation always leads to some measure of market power.

Correct AnswerverifiedShow Answer

Of the following market structures, which are considered imperfectly competitive? I. Perfect competition II. Monopoly III. Monopolistic competition IV. Oligopoly

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a monopolistically competitive industry, a firm's demand curve also represent its

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 K?

Correct AnswerverifiedShow Answer

An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 16-1 -Refer to Figure 16-1. Which of the graphs illustrates the demand curve most likely faced by a firm in a monopolistically competitive market?

Correct AnswerverifiedShow Answer

Free entry eliminates long-run profits for firms in competitive and monopolistic industries.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm has the following cost structure: ٍ If this firm is in a typical perfectly competitive market, in the long run it will likely produce

Correct AnswerverifiedShow Answer

For the economy as a whole, about what percentage of total firm revenue is spent on advertising?

Correct AnswerverifiedShow Answer

Critics of advertising argue that advertising

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Scenario 16-1 Suppose the following are the sales for all of the firms in two different industries. -Refer to Scenario 16-1. What are the concentration ratios for these industries?

Correct AnswerverifiedShow Answer

In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to

Correct AnswerverifiedShow Answer

A firm in a monopolistically competitive market faces a

Correct AnswerverifiedShow Answer

In a monopolistically competitive market,

Correct AnswerverifiedShow Answer

Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. When the firm is maximizing its profit,

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedmonopolist...View AnswerShow Answer

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monopolist...
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