Question 1

As firms exit from a monopolistically competitive industry in the long run, the remaining firmsâ€™ profits will begin to rise.

Accepted Answer

A) True 
 B)False

Question 2

The less elastic a monopolistic competitor's long-run demand curve, the

Accepted Answer

A)   greater its excess capacity.
B)   lower its price relative to that of a pure competitor having the same cost curves.
C)   higher its long-run economic profit.
D)   lower its average total cost at its equilibrium level of output.E) A) and C)
F) B) and D)

Question 3

In long-run equilibrium, both purely competitive and monopolistically competitive firms will

Accepted Answer

A)   produce at minimum average total cost.
B)   earn economic profits.
C)   achieve allocative efficiency.
D)   equate marginal cost and marginal revenue.E) All of the above
F) A) and D)

Question 4

Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because

Accepted Answer

A)   each firm has to take the market price as given.
B)   product differentiation allows each firm some degree of monopoly power.
C)   there are a few large firms in the industry and they each act as a monopolist.
D)   mutual interdependence among all firms in the industry leads to collusion.E) B) and C)
F) All of the above

Question 5

Industries X and Y both have four-firm concentration ratios of 32 percent, but the Herfindahl index for X is 256, while that for Y is 264. These data suggest

Accepted Answer

A)   greater market power in X than in Y.
B)   greater market power in Y than in X.
C)   that X is more technologically progressive than Y.
D)   that price competition is stronger in Y than in X.E) A) and B)
F) None of the above

Question 6

Answer the question on the basis of the following demand and cost data for a specific firm.  Suppose that entry into this industry changes this firm's demand schedule from columns (1)  and (3)  to columns (2)  and (3) . We can conclude that this industry is

Accepted Answer

A)   a pure monopoly.
B)   purely competitive.
C)   a constant cost industry.
D)   monopolistically competitive.E) A) and D)
F) None of the above

Question 7

The demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is not true for a monopolistically competitive industry?

Accepted Answer

A)   Firms tend to operate with excess capacity.
B)   Each firm faces a downward-sloping demand curve.
C)   These firms earn zero economic profits in the long run.
D)   Firms operate at the lowest point of their ATC curves in the long run.E) A) and D)
F) None of the above

Question 9

A monopolistically competitive industry is like a purely competitive industry in that

Accepted Answer

A)   each firm produces a standardized product.
B)   nonprice competition is a feature in both industries.
C)   neither industry has significant barriers to entry.
D)   firms in both industries face a horizontal demand curve.E) B) and C)
F) None of the above

Question 10

In the long run, a profit-maximizing monopolistically competitive firm sets it price

Accepted Answer

A)   above marginal cost.
B)   below marginal cost.
C)   equal to marginal revenue.
D)   equal to marginal cost.E) A) and B)
F) A) and C)

Question 11

An important similarity between a monopolistically competitive firm and a pure monopolist is that both

Accepted Answer

A)   realize an economic profit in the long run.
B)   achieve allocative efficiency.
C)   face demand curves that are less than perfectly elastic.
D)   achieve productive efficiency.E) A) and B)
F) A) and C)

Question 12

In which of the following market models do demand and marginal revenue diverge?

Accepted Answer

A)   pure monopoly, oligopoly, and monopolistic competition
B)   pure monopoly, oligopoly, and pure competition
C)   pure monopoly only
D)   oligopoly onlyE) None of the above
F) A) and C)

Question 13

Which of the following is a measure of the degree of industry concentration?

Accepted Answer

A)   Dow Jones Industrial Average
B)   Herfindahl Index
C)   Employment Cost Index
D)   S&P 500 IndexE) None of the above
F) A) and D)

Question 14

Answer the question on the basis of the following demand and cost data for a specific firm.   \quad \quad \quad \quad Demand Data 	ext { Demand Data } Demand Data     \quad \quad \quad    Cost Data 	ext { Cost Data } Cost Data  
 (1) (2) (3)  Total  Price  Price  Quanti  Outpu  Cost  ty  t 11.0$10.066$61009.998.8577629.008.0088648.007.0099677.106.101010726.005.001111795.154.15121286\begin{array}{|c|c|c|c|c|}\hline(1)  &(2) &(3) &&	ext { Total }  \	ext { Price }&	ext { Price }&	ext { Quanti }&	ext { Outpu }&	ext { Cost } \&&	ext { ty }& 	ext { t }\\hline 11.0 & \$ 10.0 & 6 & 6 & \$ 61 \0 & 0 & & & \\hline 9.99 & 8.85 & 7 & 7 & 62 \\hline 9.00 & 8.00 & 8 & 8 & 64 \\hline 8.00 & 7.00 & 9 & 9 & 67 \\hline 7.10 & 6.10 & 10 & 10 & 72 \\hline 6.00 & 5.00 & 11 & 11 & 79 \\hline 5.15 & 4.15 & 12 & 12 & 86 \\hline\end{array}(1)  Price 11.009.999.008.007.106.005.15​(2)  Price $10.008.858.007.006.105.004.15​(3)  Quanti  ty 6789101112​ Outpu  t 6789101112​ Total  Cost $61626467727986​​  If columns (1)  and (3)  of the demand data shown are this firm's demand schedule, economic profit will be

Accepted Answer

A)   $10.
B)   $19.
C)   $6.
D)   $8. E) A) and B)
F) None of the above

Question 15

In long-run equilibrium, monopolistic competition entails

Accepted Answer

A)   an efficient allocation of resources.
B)   an overallocation of resources due to inadequate capacity.
C)   an underallocation of resources due to excess capacity.
D)   production at the minimum attainable average total cost.E) None of the above
F) All of the above

Question 16

Monopolistic competition is characterized by excess capacity because

Accepted Answer

A)   firms are always profitable in the long run.
B)   firms charge a price that is greater than marginal cost.
C)   firms produce at an output level less than the least-cost output.
D)   the demand for the product is perfectly elastic in this type of industry.E) None of the above
F) A) and B)

Question 17

In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the profit-maximizing firm will

Accepted Answer

A)   always earn an economic profit.
B)   set price equal to marginal cost.
C)   set price above marginal cost.
D)   produce at minimum average total cost.E) B) and C)
F) A) and C)

Question 18

If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will

Accepted Answer

A)   increase.
B)   become less elastic.
C)   not be affected.
D)   decrease.E) A) and C)
F) A) and B)

Question 19

In the long run, economic theory predicts that a monopolistically competitive firm will

Accepted Answer

A)   earn an economic profit.
B)   realize all economies of scale.
C)   equate price and marginal cost.
D)   have excess production capacity.E) A) and D)
F) All of the above

Question 20

Monopolistically competitive industries are inefficient because

Accepted Answer

A)   they realize diseconomies of scale.
B)   advertising costs retard technological advance and product development.
C)   they are overpopulated with firms whose plants are underutilized.
D)   monopolistically competitive sellers engage in misleading advertising.E) B) and C)
F) B) and D)

Exam 13: Monopolistic Competition

The less elastic a monopolistic competitor's long-run demand curve, the

Correct Answer
verified

In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the profit-maximizing firm will

Correct Answer
verified

In long-run equilibrium, both purely competitive and monopolistically competitive firms will

Correct Answer
verified

The demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist.

Correct Answer
verified

Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because

Correct Answer
verified

If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will

Correct Answer
verified

A monopolistically competitive industry is like a purely competitive industry in that

Correct Answer
verified

Monopolistic competition is characterized by excess capacity because

Correct Answer
verified

In the long run, a profit-maximizing monopolistically competitive firm sets it price

Correct Answer
verified

Correct Answer
verified

In the long run, economic theory predicts that a monopolistically competitive firm will

Correct Answer
verified

Which of the following statements is not true for a monopolistically competitive industry?

Correct Answer
verified

An important similarity between a monopolistically competitive firm and a pure monopolist is that both

Correct Answer
verified

In which of the following market models do demand and marginal revenue diverge?

Correct Answer
Answered by ExamLex AI

As firms exit from a monopolistically competitive industry in the long run, the remaining firmsâ€™ profits will begin to rise.

Correct Answer
verified

Monopolistically competitive industries are inefficient because

Correct Answer
verified

Answer the question on the basis of the following demand and cost data for a specific firm. Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) to columns (2) and (3) . We can conclude that this industry is

Correct Answer
verified

Which of the following is a measure of the degree of industry concentration?

Correct Answer
verified

In long-run equilibrium, monopolistic competition entails

Correct Answer
verified

Industries X and Y both have four-firm concentration ratios of 32 percent, but the Herfindahl index for X is 256, while that for Y is 264. These data suggest

Correct Answer
verified

Exam 13: Monopolistic Competition

The less elastic a monopolistic competitor's long-run demand curve, the

Correct AnswerverifiedShow Answer

In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the profit-maximizing firm will

Correct AnswerverifiedShow Answer

In long-run equilibrium, both purely competitive and monopolistically competitive firms will

Correct AnswerverifiedShow Answer

The demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist.

Correct AnswerverifiedShow Answer

Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because

Correct AnswerverifiedShow Answer

If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will

Correct AnswerverifiedShow Answer

A monopolistically competitive industry is like a purely competitive industry in that

Correct AnswerverifiedShow Answer

Monopolistic competition is characterized by excess capacity because

Correct AnswerverifiedShow Answer

In the long run, a profit-maximizing monopolistically competitive firm sets it price

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long run, economic theory predicts that a monopolistically competitive firm will

Correct AnswerverifiedShow Answer

Which of the following statements is not true for a monopolistically competitive industry?

Correct AnswerverifiedShow Answer

An important similarity between a monopolistically competitive firm and a pure monopolist is that both

Correct AnswerverifiedShow Answer

In which of the following market models do demand and marginal revenue diverge?

Correct AnswerAnswered by ExamLex AIShow Answer

As firms exit from a monopolistically competitive industry in the long run, the remaining firmsâ€™ profits will begin to rise.

Correct AnswerverifiedShow Answer

Monopolistically competitive industries are inefficient because

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following demand and cost data for a specific firm. Suppose that entry into this industry changes this firm's demand schedule from columns (1) and (3) to columns (2) and (3) . We can conclude that this industry is

Correct AnswerverifiedShow Answer

Which of the following is a measure of the degree of industry concentration?

Correct AnswerverifiedShow Answer

In long-run equilibrium, monopolistic competition entails

Correct AnswerverifiedShow Answer

Industries X and Y both have four-firm concentration ratios of 32 percent, but the Herfindahl index for X is 256, while that for Y is 264. These data suggest

Correct AnswerverifiedShow Answer

Correct Answer
verified

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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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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Correct Answer
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Correct Answer
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Correct Answer
Answered by ExamLex AI

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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