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Exam 16: Monopolistic Competition

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Question 141

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Figure 16-5 -Refer to Figure 16-5. Which of the panels shown could illustrate the short-run situation for a monopolistically competitive firm?

A) panel a
B) panel b
C) panel c
D) All of the above are correct.

E) A) and D)
F) A) and C)

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Question 142

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Figure 16-7 -Refer to Figure 16-7. Which of the graphs depicts the situation for a profit-maximizing firm in a monopolistically competitive market?

A) panel a
B) panel b
C) panel c
D) panel d

E) C) and D)
F) B) and C)

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Question 143

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Which of the following markets is not likely characterized by a monopolistically competitive market?

Some firms have an incentive to advertise because they sell a

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

An oligopoly

In the debate between the critics and defenders of advertising, what conclusion have policymakers come to regarding the effect of advertising on competition - advertising makes markets more competitive or less competitive?

Scenario 16-3 Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) -Refer to Scenario 16-3. How many ice cream cones should Peter sell in one day to maximize his profits?

Which of the following industries has the highest concentration ratio?

For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much revenue will it earn?

Which of the following is unique to a monopolistically competitive firm when compared to an oligopoly?

Figure 16-5 -Refer to Figure 16-5. Which of the graphs depicts a short-run equilibrium that will encourage the exit of some firms from a monopolistically competitive industry?

A monopolistically competitive industry is characterized by

Table 16-5 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-5. What price should this firm charge to maximize profit?

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. When this firm profit maximizes and faces a constant marginal cost of $7, what is the amount of its markup over marginal cost?

In a monopolistically competitive market,

Scenario 16-3 Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) -Refer to Scenario 16-3. When Peter maximizes his profits, what is his total cost per day?

For a profit-maximizing firm in a monopolistically competitive market, when price is equal to average total cost, price must lie above marginal cost.

Due to free entry and exit in monopolistic competition, in the long run price must be equal to