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In monopolistic competition there is/are


A) many sellers who each face a downward-sloping demand curve.
B) a few sellers who each face a downward-sloping demand curve.
C) only one seller who faces a downward-sloping demand curve.
D) many sellers who each face a perfectly elastic demand curve.

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A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

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You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants.You plan to distinguish your restaurant from your competitors by offering northern Italian cuisine and using locally grown organic produce.What is likely to happen in the restaurant market in your hometown after you open?


A) Your competitors are likely to change their menus to make their products more similar to yours.
B) The demand curve facing each restaurant owner shifts to the right.
C) The demand curve facing each restaurant owner becomes more elastic.
D) While the demand curves facing your competitors becomes more elastic, your demand curve will be inelastic.

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One reason why the coffeehouse market is competitive is that


A) demand for specialty coffee is very high.
B) it is trendy and therefore is likely to have a customer following.
C) barriers to entry are low.
D) consumption takes place in public.

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A monopolistic competitor does not earn profits in the long run unless it can successfully differentiate its product in the minds of its consumers.

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Table 13-5 Table 13-5 Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 13-5.What are the firm's profit-maximizing or loss-minimizing price and quantity? A) price = $10; quantity = 5. B) price = $12; quantity = 4. C) The firm should shut down temporarily. D) This cannot be determined from the information given. Table 13-5 shows the demand and cost data facing a monopolistically competitive producer of canvas bags. -Refer to Table 13-5.What are the firm's profit-maximizing or loss-minimizing price and quantity?


A) price = $10; quantity = 5.
B) price = $12; quantity = 4.
C) The firm should shut down temporarily.
D) This cannot be determined from the information given.

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Figure 13-7 Figure 13-7 Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. -Refer to Figure 13-7.Which of the following is the area that represents the profit or loss experienced by the firm? A) A loss represented by the rectangle P<sub>2</sub>uvP<sub>1</sub>. B) A loss represented by the rectangle P<sub>2</sub>uwP<sub>0</sub>. C) A loss represented by the rectangle P<sub>1</sub>vwP<sub>0</sub>. D) An accounting profit equal to P<sub>1</sub>vwP<sub>0</sub>. Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. -Refer to Figure 13-7.Which of the following is the area that represents the profit or loss experienced by the firm?


A) A loss represented by the rectangle P2uvP1.
B) A loss represented by the rectangle P2uwP0.
C) A loss represented by the rectangle P1vwP0.
D) An accounting profit equal to P1vwP0.

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Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

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Unlike the perfectly competitive firm,th...

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There are many cattle ranchers in the world,and there are also many McDonald's restaurants in the world.Why,then,does a McDonald's restaurant face a downward sloping demand curve while a cattle rancher faces a horizontal demand curve?

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All cattle ranchers are selling identica...

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If a monopolistically competitive firm lowers its price and,as a result,its total revenue decreases then


A) the output effect of the price change was less than the price effect.
B) the output effect of the price change was greater than the price effect.
C) the firm's demand curve must have decreased.
D) the substitution effect of the price change was greater than the income effect.

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A monopolistically competitive firm faces a downward-sloping demand curve because


A) it is able to control price and quantity demanded.
B) there are few substitutes for its product.
C) of product differentiation.
D) its market decisions are affected by the decisions of its rivals.

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Brand management refers to


A) picking a brand name for a new product that will attract attention.
B) the efforts to maintain the differentiation of a product over time.
C) efforts to reduce the cost of production.
D) selling the right to use a brand name in a particular market.

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Suppose Jason owns a small pastry shop.Jason wants to maximize his profit,and thinking back to the college microeconomics class he took in college,he decides he needs to produce a quantity of pastries which will minimize his average total cost.Will Jason's strategy necessarily maximize profits for his pastry shop?


A) Yes; Since jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized.
B) Not necessarily; This strategy will only maximize Jason's profit in the long run, but not in the short run.
C) No; In order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized.
D) Not necessarily; Depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum.

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Table 13-4 Table 13-4 Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Victoria's profit-maximizing quantity sold (Q) and price (P) are A) Q = 3; P = $7. B) Q = 4; P = $6. C) Q = 5; P = $5. D) Q = 6; P = $4. Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Victoria's profit-maximizing quantity sold (Q) and price (P) are


A) Q = 3; P = $7.
B) Q = 4; P = $6.
C) Q = 5; P = $5.
D) Q = 6; P = $4.

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The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which


A) marginal revenue equals marginal cost.
B) average revenue exceeds marginal cost by the greatest amount.
C) price equals marginal cost.
D) average revenue equals average total cost.

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Table 13-4 Table 13-4 Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Based on the data in the table,which of the following statements is true? A) The table summarizes Victoria's short-run, rather than long-run, market for plastic vials. B) Victoria could be either a monopolistically competitive or a perfectly competitive firm. C) Victoria should shut down temporarily. D) Victoria should advertise more in order to increase the demand for plastic vials. Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories. -Refer to Table 13-4.Based on the data in the table,which of the following statements is true?


A) The table summarizes Victoria's short-run, rather than long-run, market for plastic vials.
B) Victoria could be either a monopolistically competitive or a perfectly competitive firm.
C) Victoria should shut down temporarily.
D) Victoria should advertise more in order to increase the demand for plastic vials.

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In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?


A) Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency.
B) The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product.
C) Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency.
D) Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency.

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Which of the following is true of a typical firm in a monopolistically competitive industry?


A) Product differentiation allows a successful firm to emerge as a market leader in the industry.
B) All firms have identical cost structures.
C) The more successful firms have an incentive to merge in order to exert greater market power.
D) Each firm acts independently.

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