Question 1

Monopolistic competitive firms are productively inefficient because production occurs where

Accepted Answer

A)   price is greater than marginal revenue.
B)   marginal cost is less than price.
C)   marginal cost is not at its lowest.
D)   average total cost is not at its lowest.E) B) and D)
F) A) and B)

Question 2

Which of the following characteristics provide a monopolistically competitive firm some monopoly power?

Accepted Answer

A)   significant barriers to entry into the industry
B)   product differentiation
C)   a low concentration ratio in the industry
D)   price discriminationE) C) and D)
F) None of the above

Question 3

Which of the following is not characteristic of long-run equilibrium under monopolistic competition?

Accepted Answer

A)   Price equals minimum average total cost.
B)   Marginal cost equals marginal revenue.
C)   Price is equal to average total cost.
D)   Price exceeds marginal cost.E) A) and B)
F) C) and D)

Question 4

In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where

Accepted Answer

A)   ATC = P, MR = MC = P.
B)   ATC 
C)   ATC 
D)   ATC = P, MR = MC < P.E) A) and D)
F) A) and C) D

Question 5

The following are the respective numbers for the four-firm concentration ratio and Herfindahl index in an industry. Which set of numbers would suggest that the industry was monopolistically competitive?

Accepted Answer

A)   25 and 207
B)   76 and 2662
C)   80 and 1800
D)   89 and 2582E) A) and D)
F) B) and C)

Question 6

(Last Word)  If the minimum wage in the restaurant industry increases over time, eventually we would expect

Accepted Answer

A)   the restaurant industry to expand as higher wages drive up demand.
B)   there to be fewer of all types of restaurants, but no change in the proportion of mom and pop restaurants relative to chain restaurants.
C)   the ratio of mom and pop restaurants to highly capitalized chain restaurants to increase.
D)   the ratio of highly capitalized chain restaurants to mom and pop restaurants to increase.E) A) and C)
F) C) and D)

Question 7

For which market model can we not assume a homogeneous product?

Accepted Answer

A)   pure competition
B)   pure monopoly
C)   monopolistic competition
D)   oligopolyE) C) and D)
F) A) and D) C

Question 8

Monopolistically competitive and purely competitive industries are similar in that

Accepted Answer

A)   both are assured of short-run economic profits.
B)   both produce differentiated products.
C)   the demand curves facing individual firms are perfectly elastic in both industries.
D)   there are few, if any, barriers to entry.E) A) and B)
F) B) and C)

Question 9

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

Accepted Answer

A)   the likelihood of realizing economic profits in the long run would be enhanced.
B)   individual firms would now be operating at outputs where their average total costs would be higher.
C)   the industry would more closely approximate pure competition.
D)   the likelihood of collusive pricing would increase.E) B) and C)
F) None of the above

Question 10

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

Accepted Answer

A)   P = MC = ATC.
B)   MR = MC and minimum ATC > P.
C)   MR > MC and P = minimum ATC.
D)   MR = MC and P > minimum ATC.E) C) and D)
F) None of the above

Question 11

Monopolistically competitive firms exist due to high barriers to entry.

Accepted Answer

A) True 
 B)False

Question 12

"Excess capacity" exists in monopolistic competition but not in pure competition.

Accepted Answer

A) True 
 B)False

Question 13

The following pairs of products illustrate product differentiation, except

Accepted Answer

A)   Coke and Pepsi.
B)   tank tops and denim shorts.
C)   airport hotels and downtown hotels.
D)   New York-style pizza and Chicago-style pizza.E) All of the above
F) None of the above

Question 14

If the four-firm concentration ratio for industry X is 80,

Accepted Answer

A)   the four largest firms account for 80 percent of total sales.
B)   each of the four largest firms accounts for 20 percent of total sales.
C)   the four largest firms account for 20 percent of total sales.
D)   the industry is monopolistically competitive.E) A) and D)
F) C) and D)

Question 15

Answer the question based on the demand and cost schedules for a monopolistically competitive firm given in the table below.   Price  Quntity  Dennded  Total  Cost  Output $201$101182202163293144364125405106426\begin{array} { | c | c | c | c | } \hline 	ext { Price } & \begin{array} { c } 	ext { Quntity } \	ext { Dennded }\end{array} & \begin{array} { c } 	ext { Total } \	ext { Cost }\end{array} & 	ext { Output } \\hline \$ 20 & 1 & \$ 10 & 1 \\hline 18 & 2 & 20 & 2 \\hline 16 & 3 & 29 & 3 \\hline 14 & 4 & 36 & 4 \\hline 12 & 5 & 40 & 5 \\hline 10 & 6 & 42 & 6 \\hline\end{array} Price $201816141210​ Quntity  Dennded ​123456​ Total  Cost ​$102029364042​ Output 123456​​  At the profit-maximizing level of output, marginal revenue is

Accepted Answer

A)   $0.
B)   $4.
C)   $5.
D)   $8. E) B) and C)
F) A) and B)

Question 16

Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from

Accepted Answer

A)   rising marginal costs.
B)   a perfectly elastic product demand curve.
C)   relatively easy entry.
D)   product differentiation and development.E) None of the above
F) A) and D)

Question 17

Which of the following assumptions is part of the model of monopolistic competition?

Accepted Answer

A)   Firms make identical or homogeneous products.
B)   There is no mutual interdependence among firms.
C)   There are significant barriers to entry into the market.
D)   Firms have no control over their products' prices.E) None of the above
F) A) and B)

Question 18

The monopolistically competitive seller's demand curve will become more elastic the

Accepted Answer

A)   more significant the barriers to entering the industry.
B)   greater the degree of product differentiation.
C)   larger the number of competitors.
D)   smaller the number of competitors.E) A) and C)
F) A) and B)

Question 19

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

Accepted Answer

A)   former has fewer barriers to entry into the industry.
B)   latter recognizes that price must be reduced to sell more output.
C)   latterâ€™s demand curve is perfectly elastic.
D)   latter differentiates its product.E) C) and D)
F) B) and D)

Question 20

(Last Word)  Which of the following best explains why an increase in the minimum wage is more problematic for mom and pop restaurants than for big chain restaurants?

Accepted Answer

A)   Chain restaurants are exempt from minimum wage laws.
B)   Mom and pop restaurants have more difficulty attracting workers when wages rise.
C)   Mom and pop restaurants are more dependent on labor relative to chain restaurants.
D)   Chain restaurants have more monopoly pricing power and can more easily raise prices than mom and pop stores.E) A) and B)
F) A) and C) C

Exam 13: Monopolistic Competition

Monopolistic competitive firms are productively inefficient because production occurs where

Correct Answer
verified

Which of the following characteristics provide a monopolistically competitive firm some monopoly power?

Correct Answer
verified

Which of the following is not characteristic of long-run equilibrium under monopolistic competition?

Correct Answer
verified

In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where

Correct Answer
verified
D

The following are the respective numbers for the four-firm concentration ratio and Herfindahl index in an industry. Which set of numbers would suggest that the industry was monopolistically competitive?

Correct Answer
verified

(Last Word) If the minimum wage in the restaurant industry increases over time, eventually we would expect

Correct Answer
verified

For which market model can we not assume a homogeneous product?

Correct Answer
verified
C

Monopolistically competitive and purely competitive industries are similar in that

Correct Answer
verified

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

Correct Answer
verified

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

Correct Answer
verified

Monopolistically competitive firms exist due to high barriers to entry.

Correct Answer
verified

"Excess capacity" exists in monopolistic competition but not in pure competition.

Correct Answer
verified

The following pairs of products illustrate product differentiation, except

Correct Answer
verified

If the four-firm concentration ratio for industry X is 80,

Correct Answer
Answered by ExamLex AI

Correct Answer
verified

Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from

Correct Answer
verified

Which of the following assumptions is part of the model of monopolistic competition?

Correct Answer
verified

The monopolistically competitive seller's demand curve will become more elastic the

Correct Answer
verified

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

Correct Answer
verified

(Last Word) Which of the following best explains why an increase in the minimum wage is more problematic for mom and pop restaurants than for big chain restaurants?

Correct Answer
verified
C

Exam 13: Monopolistic Competition

Monopolistic competitive firms are productively inefficient because production occurs where

Correct AnswerverifiedShow Answer

Which of the following characteristics provide a monopolistically competitive firm some monopoly power?

Correct AnswerverifiedShow Answer

Which of the following is not characteristic of long-run equilibrium under monopolistic competition?

Correct AnswerverifiedShow Answer

In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where

Correct AnswerverifiedD

The following are the respective numbers for the four-firm concentration ratio and Herfindahl index in an industry. Which set of numbers would suggest that the industry was monopolistically competitive?

Correct AnswerverifiedShow Answer

(Last Word) If the minimum wage in the restaurant industry increases over time, eventually we would expect

Correct AnswerverifiedShow Answer

For which market model can we not assume a homogeneous product?

Correct AnswerverifiedC

Monopolistically competitive and purely competitive industries are similar in that

Correct AnswerverifiedShow Answer

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Monopolistically competitive firms exist due to high barriers to entry.

Correct AnswerverifiedShow Answer

"Excess capacity" exists in monopolistic competition but not in pure competition.

Correct AnswerverifiedShow Answer

The following pairs of products illustrate product differentiation, except

Correct AnswerverifiedShow Answer

If the four-firm concentration ratio for industry X is 80,

Correct AnswerAnswered by ExamLex AIShow Answer

Correct AnswerverifiedShow Answer

Long-run equilibrium for a monopolistically competitive firm where economic profits are zero results from

Correct AnswerverifiedShow Answer

Which of the following assumptions is part of the model of monopolistic competition?

Correct AnswerverifiedShow Answer

The monopolistically competitive seller's demand curve will become more elastic the

Correct AnswerverifiedShow Answer

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

Correct AnswerverifiedShow Answer

(Last Word) Which of the following best explains why an increase in the minimum wage is more problematic for mom and pop restaurants than for big chain restaurants?

Correct AnswerverifiedC

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D

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C

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Correct Answer
Answered by ExamLex AI

Correct Answer
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C