Question 1

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods. Firm B produces and sells industrial products. Firm C produces and sells an agricultural commodity. Which firm is likely to spend the greatest portion of its total revenue on advertising?

Accepted Answer

A)   firm A
B)   firm B
C)   firm C
D)   There is no reason to believe that any one of the three firms would spend a greater portion of its total revenue on advertising than the other two firms.E) All of the above
F) A) and D)

Question 2

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Accepted Answer

A)   0.5
B)   2
C)   10
D)   20E) A) and B)
F) A) and D)

Question 3

In the long run,

Accepted Answer

A)   monopolistically competitive firms earn a higher profit than perfectly competitive firms because monopolistically competitive firms have some monopoly power.
B)   monopolistically competitive firms produce a higher output than perfectly competitive firms because competition drives the perfectly competitive firms' output down.
C)   both monopolistically competitive and perfectly competitive firms produce where P = MC.
D)   both monopolistically competitive and perfectly competitive firms produce where P = ATd.E) A) and C)
F) A) and B)

Question 4

A firm has the following cost structure:  If this firm is in a typical monopolistically 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 B)
F) None of the above

Question 5

In the long run, monopolistically competitive firms produce where demand equals average total cost.

Accepted Answer

A) True 
 B)False

Question 6

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1. What is the concentration ratio in Industry A?

Accepted Answer

A)   38%
B)   71%
C)   92%
D)   98%E) A) and D)
F) B) and D)

Question 7

Figure 16-2. The figure is drawn for a monopolistically competitive firm. 
-Refer to Figure 16-2. The firm's profit­maximizing level of output is

Accepted Answer

A)   16 units.
B)   24 units.
C)   32 units.
D)   48 units.E) A) and B)
F) A) and C)

Question 8

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1. What is the concentration ratio in Industry C?

Accepted Answer

A)   13%
B)   32%
C)   52%
D)   84%E) C) and D)
F) B) and D)

Question 9

Which of the following goods are not likely to be sold in monopolistically competitive markets?

Accepted Answer

A)   jeans
B)   books
C)   tap water
D)   clocksE) C) and D)
F) A) and D)

Question 10

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Accepted Answer

A) True 
 B)False

Question 11

The two types of imperfectly competitive markets are

Accepted Answer

A)   markets with advertising and markets with price competition.
B)   public goods and common resources.
C)   oligopoly and monopoly.
D)   monopolistic competition and oligopoly.E) A) and B)
F) None of the above

Question 12

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1. Which industry is the least competitive?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) All of the above
F) None of the above

Question 13

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

Accepted Answer

A)   exceeds the level of output at which marginal revenue equals marginal cost.
B)   exceeds the level of output at which marginal cost equals average total cost.
C)   falls short of the level of output at which price equals marginal cost.
D)   exceeds the firm's efficient scale of output.E) None of the above
F) B) and D)

Question 14

Figure 16-12 
-Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Accepted Answer

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

Question 15

Critics of markets that are characterized by firms that sell brand name products argue that brand names encourage consumers to pay more for branded products that

Accepted Answer

A)   have elastic demand curves.
B)   are very different from generic products.
C)   are indistinguishable from generic products.
D)   consumer-advocate groups have found to be inferior.E) B) and C)
F) C) and D)

Question 16

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. What is the concentration ratio for Industry A?

Accepted Answer

A)   approximately 52%
B)   approximately 58%
C)   approximately 66%
D)   approximately 72%E) B) and D)
F) A) and B)

Question 17

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Accepted Answer

A)   advertising.
B)   the product-variety externality.
C)   intermediate materials.
D)   taxes and regulation.E) B) and C)
F) A) and C)

Question 18

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) All of the above
F) C) and D)

Question 19

Figure 16-1    
-Refer to Figure 16-1. Which of the following sets of explanations best describes the differences between the graphs above?

Accepted Answer

A)   Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: oligopoly firm's demand curvePanel D: perfectly competitive firm's demand curve
B)   Panel A: oligopoly firm's demand curve Panel B: perfectly competitive firm's demand curvePanel C: monopolistically competitive firm's demand curvePanel D: supply curve
C)   Panel A: perfectly competitive firm's demand curve Panel B: monopolistically competitive firm's demand curve Panel C: monopoly firm's demand curvePanel D: supply curve
D)   Panel A: monopolistically competitive firm's demand curve Panel B: monopoly firm's demand curve Panel C: perfectly competitive firm's demand curvePanel D: supply curveE) None of the above
F) C) and D)

Question 20

Which of the following best describes the idea of excess capacity in monopolistic competition?

Accepted Answer

A)   Firms produce more output than is socially desirable.
B)   The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve.
C)   Due to product differentiation, firms choose output levels where price equals average total cost.
D)   Firms keep some surplus output on hand in case there is a shift in the demand for their product.E) A) and B)
F) A) and C)

Exam 16: Monopolistic Competition

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry A?

Correct AnswerverifiedShow Answer

A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Correct AnswerverifiedShow Answer

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. Which industry is the least competitive?

Correct AnswerverifiedShow Answer

Which of the following best describes the idea of excess capacity in monopolistic competition?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The two types of imperfectly competitive markets are

Correct AnswerverifiedShow Answer

Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm occurs at Q1 units of output. This level of output, Q1,

Correct AnswerverifiedShow Answer

In the long run,

Correct AnswerverifiedShow Answer

Firm A produces and sells in a market that is characterized by highly differentiated consumer goods. Firm B produces and sells industrial products. Firm C produces and sells an agricultural commodity. Which firm is likely to spend the greatest portion of its total revenue on advertising?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. What is the concentration ratio for Industry A?

Correct AnswerverifiedShow Answer

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry C?

Correct AnswerverifiedShow Answer

Figure 16-1 -Refer to Figure 16-1. Which of the following sets of explanations best describes the differences between the graphs above?

Correct AnswerverifiedShow Answer

For the economy as a whole, spending on advertising comprises about what percent of total firm revenue?

Correct AnswerverifiedShow Answer

Figure 16-12 -Refer to Figure 16-12. Does this monopolistically competitive market produce the welfare-maximizing level of output?

Correct AnswerverifiedShow Answer

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. The firm's profit­maximizing level of output is

Correct AnswerverifiedShow Answer

Critics of markets that are characterized by firms that sell brand name products argue that brand names encourage consumers to pay more for branded products that

Correct AnswerverifiedShow Answer

Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with

Correct AnswerverifiedShow Answer

In the long run, monopolistically competitive firms produce where demand equals average total cost.

Correct AnswerverifiedShow Answer

Which of the following goods are not likely to be sold in monopolistically competitive markets?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 16-2. The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-2. The firm's profitmaximizing level of output is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified