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Exam 12: Monopolistic Competition

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Question 41

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In monopolistic competition, a firm

A) Has no market power.
B) Captures significant economies of scale.
C) Has a downward-sloping demand curve.
D) Has a standardized product that all firms produce.

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Question 42

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One of the reasons for low cross-price elasticity in monopolistic competition and high cross-price elasticity in perfect competition is that

A) Firms in perfect competition differentiate their products.
B) In monopolistic competition brand loyal consumers view other available products as poor substitutes.
C) Consumers do not have perfect substitutes in perfect competition.
D) To save money, firms in monopolistic competition do not advertise.

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Question 43

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Which of the following characterizes the difference between oligopoly and monopolistic competition?

Which of the following market structures will have higher prices in the long run than perfect competition, ceteris paribus?

Refer to Figure 26.3 for a monopolistically competitive firm in the long run.Which of the following observations results in the problem of excess capacity?

In monopolistic competition, a firm's demand curve is tangent to the ATC curve in the long run because

Marginal cost pricing means that goods are offered for sale at prices equal to their marginal cost.

The monopoly aspect of monopolistic competition is that there is only one seller.

Demand and Cost Data for Will's Beach Ball Company

Price	Demand Data Quantity	Cost Data Output	Total Cost
$11	6	6	$48
$10	7	7	$52
$9	8	8	$57
$8	9	9	$63
$7	10	10	$70

Table $26.1$ A Monopolistically Competitive Firm Refer to Table 26.1.In order to maximize profit, Will's Beach Ball Company should produce _______ and charge a price of _______ each.

Monopolistic competition results in allocative efficiency.

All of the following are examples of nonprice competition except

Demand and Cost Data for Will's Beach Ball Company

Price	Demand Data Quantity	Cost Data Output	Total Cost
$11	6	6	$48
$10	7	7	$52
$9	8	8	$57
$8	9	9	$63
$7	10	10	$70

Table $26.1$ A Monopolistically Competitive Firm Refer to Table 26.2.At the profit-maximizing output and price, Sylvie's Shampoo Company.will earn a profit equal to

One In the News article is titled "The Cola Wars: It's Not All Taste." Firms in a monopolistically competitive industry, such as the soft drink market, are likely to advertise in an attempt to

Firms in a monopolistically competitive market will

Which of the following industries is not an example of monopolistic competition?

A monopolistically competitive firm maximizes profits in the short run and long run at an output level where marginal revenue equals marginal costs.

Refer to Figure 26.5.Which firm is least likely to engage in advertising?

A monopolistically competitive firm confronts a downward-sloping demand curve and as a result has some market power.

If new firms enter a monopolistically competitive market, the demand curves for the existing firms will shift to the

Refer to Figure 26.1.The output that maximizes production efficiency for this firm is