Question 1

Describe why monopolistically competitive firms find it important to establish brand loyalty.

Accepted Answer

The extent of power a monopolistically c...

Question 2

In 2008 Coca-Cola was the most valuable brand name.

Accepted Answer

A) True 
 B)False

Question 3

Marginal cost pricing means that

Accepted Answer

A)   Goods are offered for sale at prices equal to average total cost.
B)   Firms produce where marginal cost equals marginal revenue.
C)   Firms produce where marginal cost equals zero.
D)   Goods are offered for sale at prices equal to marginal cost.E) All of the above
F) A) and B)

Question 4

Which of the following market structures will have lower prices in the long run than monopoly, ceteris paribus?

Accepted Answer

A)   Perfect competition, oligopoly, and monopolistic competition.
B)   Perfect competition, but not oligopoly or monopolistic competition.
C)   Perfect competition and oligopoly, but not monopolistic competition.
D)   Oligopoly and monopolistic competition, but not perfect competition.E) A) and B)
F) All of the above

Question 5

As new firms enter a monopolistically competitive industry, the demand curve for an individual firm shifts to the right.

Accepted Answer

A) True 
 B)False

Question 6

Concentration ratios for monopolistically competitive markets typically fall in the range of 70 to 100 percent.

Accepted Answer

A) True 
 B)False

Question 7

When new firms enter a monopolistically competitive industry, the market

Accepted Answer

A)   Supply curve shifts to the left.
B)   Supply curve shifts to the right.
C)   Demand curve shifts to the left.
D)   Demand curve shifts to the right.E) A) and C)
F) All of the above

Question 8

A monopolistically competitive firm maximizes profits or minimizes losses in the short run by

Accepted Answer

A)   Setting price equal to marginal cost.
B)   Producing at the output level where ATC is minimized.
C)   Producing at the output level where MR equals MC.
D)   Producing at the output level where MC equals ATC.E) C) and D)
F) None of the above

Question 9

A distinguishing characteristic of monopolistic competition is that there are many firms in an industry.

Accepted Answer

A) True 
 B)False

Question 10

A concentration ratio measures the

Accepted Answer

A)   Proportion of industry output produced by all firms.
B)   Proportion of industry output produced by the largest firms.
C)   Dollar value of total industry output produced by all firms.
D)   Dollar value of total industry output produced by the largest firms.E) A) and B)
F) C) and D)

Question 11

The combined market share of the top four firms in a monopolistically competitive industry will typically be in the range of

Accepted Answer

A)   Zero to 2 percent.
B)   Zero to 5 percent.
C)   20 to 40 percent.
D)   70 to 100 percent.E) B) and D)
F) A) and D)

Question 12

Discuss both the price elasticity of demand and the cross-price elasticity of demand conditions facing a firm in a monopolistically competitive industry.Include in your essay the role of advertising and the creation of brand loyalty.

Accepted Answer

Firms in monopolistic competition advert...

Question 13

Which of the following characterizes monopolistic competition?

Accepted Answer

A)   Price leadership.
B)   Zero long-run profit.
C)   Retaliation.
D)   Marginal cost pricing.E) All of the above
F) None of the above

Question 14

Which of the following is not true about a monopolistic competitor?

Accepted Answer

A)   It maximizes profit at the point where MC = MR.
B)   It produces less output than a perfectly competitive firm, ceteris paribus.
C)   It charges a higher price than a perfectly competitive firm, ceteris paribus.
D)   It can earn economic profits in the long run.E) None of the above
F) All of the above

Question 15

In monopolistic competition, each firm competes with other firms offering identical substitutes.

Accepted Answer

A) True 
 B)False

Question 16

Which firm in Figure 26.5 is producing at the output level that maximizes production efficiency?

Accepted Answer

A)   Firms A and C only.
B)   Firm A only.
C)   Firm B only.
D)   Firms B and D only.E) A) and C)
F) All of the above

Question 17

Which of the firms in Figure 26.5 is most likely a monopoly?

Accepted Answer

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

Question 18

A major difference between oligopoly and monopolistic competition is that oligopolies do not

Accepted Answer

A)   Have high concentration ratios.
B)   Have many competitors.
C)   Have high barriers to entry.
D)   Confront a downward-sloping demand curve.E) A) and B)
F) A) and D)

Question 19

Which of the following most characterizes monopolistic competition?

Accepted Answer

A)   Price leadership.
B)   Product differentiation.
C)   Price discrimination.
D)   Economies of scale.E) C) and D)
F) B) and D)

Question 20

When firms enter a monopolistically competitive industry, the industry cost curves shift to the right.

Accepted Answer

A) True 
 B)False

Exam 12: Monopolistic Competition

Marginal cost pricing means that

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When new firms enter a monopolistically competitive industry, the market

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Concentration ratios for monopolistically competitive markets typically fall in the range of 70 to 100 percent.

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A major difference between oligopoly and monopolistic competition is that oligopolies do not

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When firms enter a monopolistically competitive industry, the industry cost curves shift to the right.

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Which firm in Figure 26.5 is producing at the output level that maximizes production efficiency?

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Which of the following is not true about a monopolistic competitor?

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Which of the following characterizes monopolistic competition?

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In 2008 Coca-Cola was the most valuable brand name.

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Which of the following most characterizes monopolistic competition?

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A monopolistically competitive firm maximizes profits or minimizes losses in the short run by

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Describe why monopolistically competitive firms find it important to establish brand loyalty.

Correct AnswerverifiedThe extent of power a monopolistically c...View AnswerShow Answer

In monopolistic competition, each firm competes with other firms offering identical substitutes.

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Discuss both the price elasticity of demand and the cross-price elasticity of demand conditions facing a firm in a monopolistically competitive industry.Include in your essay the role of advertising and the creation of brand loyalty.

Correct AnswerverifiedFirms in monopolistic competition advert...View AnswerShow Answer

The combined market share of the top four firms in a monopolistically competitive industry will typically be in the range of

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As new firms enter a monopolistically competitive industry, the demand curve for an individual firm shifts to the right.

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A distinguishing characteristic of monopolistic competition is that there are many firms in an industry.

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A concentration ratio measures the

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Which of the following market structures will have lower prices in the long run than monopoly, ceteris paribus?

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Which of the firms in Figure 26.5 is most likely a monopoly?

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The extent of power a monopolistically c...
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Firms in monopolistic competition advert...
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