FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Monopolistic Competition

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

In monopolistically competitive markets, free entry and exit suggests that

A) the market structure will eventually be characterized by perfect competition in the long run.
B) all firms earn zero economic profits in the long run.
C) some firms will be able to earn economic profits in the long run.
D) some firms will be forced to incur economic losses in the long run.

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

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e., on an average night, 80 percent of the hotel rooms are full) . This kind of excess capacity is indicative of what kind of market?

A) Perfect competition and monopolistic competition
B) Perfect competition only
C) Monopolistic competition only
D) Oligopoly

E) None of the above
F) A) and D)

Correct Answer

verified

Show Answer

Question 43

True/False

Review LaterAdd Note

Brand names are rarely used to convey information about product quality.

Policymakers have generally come to accept the view that advertising enhances the efficiency of markets.

Discuss how brand names may enhance the efficiency of markets in a less developed country.

In which of the following market structures can firms earn economic profits in the long run?

Figure 16-10 ​ ​ -Refer to Figure 16-10. If this firm minimized cost, how much output will it produce?

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2. Which of the following will occur in the long run in this industry?

Scenario 16-4 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.) $\begin{array}{|l|l|l|l|l|}\hline \text { Quantity } & \text { Price } & \text { MR } & \text { MC } & \text { ATC } \\\hline 20 & \$ 5.60 & \$ 5.20 & \$ 2.20 & \$ 2.05 \\\hline 40 & \$ 5.20 & \$ 4.40 & \$ 2.40 & \$ 2.10 \\\hline 60 & \$ 4.80 & \$ 3.60 & \$ 2.60 & \$ 2.15 \\\hline 80 & \$ 4.40 & \$ 2.80 & \$ 2.80 & \$ 2.20 \\\hline 100 & \$ 4.00 & \$ 2.00 & \$ 3.00 & \$ 2.25 \\\hline 120 & \$ 3.60 & \$ 1.20 & \$ 3.20 & \$ 2.30 \\\hline 140 & \$ 3.20 & \$ 0.40 & \$ 3.40 & \$ 2.35 \\\hline 160 & \$ 2.80 & -\$ 0.40 & \$ 3.60 & \$ 2.40 \\\hline 180 & \$ 2.40 & -\$ 1.20 & \$ 3.80 & \$ 2.45 \\\hline\end{array}$ -Refer to Scenario 16-4. When Peter maximizes his profits, how much revenue does he earn per day?

Table 16-4 Beatrice's Birthday Cakes operates in a monopolistically competitive market, so it is one bakery among many in the market for birthday cakes. The following table presents cost and revenue data for birthday cakes at Beatrice's. ​ ​ ​ ​ -Refer to Table 16-4. If the government forced Beatrice's to produce at the efficient scale of output, what is the maximum profit Beatrice's could earn?

Figure 16-5 The figure is drawn for a monopolistically competitive firm. -Refer to Figure 16-5. Given this firm's cost curves, if the firm were perfectly competitive rather than monopolistically competitive, then in a long-run equilibrium it would produce

Evaluate the following statement in the context of business-stealing and product-variety externalities: "We have too many student apartments in this town already. Statistics show that vacancy rates average 15 percent during any given semester."

Figure 16-3 -Refer to Figure 16-3. The maximum total short-run economic profit for the monopolistically competitive firm in this figure is

Which of the following conditions is characteristic of a monopolistically competitive firm in both the short run and the long run?

In the long run, a monopolistically competitive firm produces a quantity that is

For a monopolistically competitive firm,

The relationship between advertising and product differentiation is

Figure 16-12 ​ ​ -Refer to Figure 16-12. The difference between the price charged by the monopolistically competitive firm and the price that would be charged if this firm operated in a perfectly competitive market is represented by which line segment?

Defenders of advertising argue that firms use advertising as a signal of quality, even if the advertising delivers little helpful information about the product.

Figure 16-8 ​ -Refer to Figure 16-8. Assume a monopolistically competitive firm is currently producing the profit-maximizing level of output. Which of the following represents the excess capacity of this firm?