Question 1

Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

Accepted Answer

Some people argue that celebrity endorse...

Question 2

A monopolistically competitive market has characteristics that are similar to

Accepted Answer

A)   a monopoly only.
B)   a competitive firm only.
C)   both a monopoly and a competitive firm.
D)   neither a monopoly nor a competitive firm.E) None of the above
F) B) and D)

Question 3

Which of the following statements is not correct?

Accepted Answer

A)   Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs.
B)   Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry.
C)   Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry.
D)   Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers.E) A) and B)
F) A) and C)

Question 4

The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

Accepted Answer

A) True 
 B)False

Question 5

Monopolistic competition is the only market structure that features many sellers.

Accepted Answer

A) True 
 B)False

Question 6

Table 16-6
Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling.
 
-Refer to Table 16-6.When maximizing profit,what price does Traci's charge for a haircut?

Accepted Answer

A)   $20
B)   $25
C)   $30
D)   $35E) B) and D)
F) All of the above

Question 7

Monopolistic competition is considered inefficient because

Accepted Answer

A)   price exceeds marginal cost.
B)   output is excessive.
C)   long-run profits are positive.
D)   barriers to entry limit the number of firms in the market.E) A) and B)
F) A) and C)

Question 8

If we observe a great deal of advertising of dog food,we can infer that

Accepted Answer

A)   consumers spend very little of their disposable income on dog food.
B)   dog food is cheap to produce.
C)   dog food is a highly-differentiated product.
D)   firms who do not advertise earn higher profits than those who do.E) A) and D)
F) All of the above

Question 9

Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

Accepted Answer

A)   P > demand and P = MR
B)   ATC > demand and MR = MC
C)   P > MC and demand = ATC
D)   P  MRE) None of the above
F) A) and C)

Question 10

Which of the following is a characteristic of monopolistic competition?

Accepted Answer

A)   ownership of a key resource by a single firm
B)   free entry
C)   identical product
D)   patentsE) All of the above
F) C) and D)

Question 11

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
 
-Refer to Table 16-2.Which industry has the lowest concentration ratio?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) All of the above
F) A) and B)

Question 12

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Accepted Answer

A)   P > ATC
B)   P = ATC
C)   P 
D)   Any of the above could be correct.E) None of the above
F) A) and C)

Question 13

As firms exit a monopolistically competitive market,profits of remaining firms

Accepted Answer

A)   decline, and product diversity in the market decreases.
B)   decline, and product diversity in the market increases.
C)   rise, and product diversity in the market decreases.
D)   rise, and product diversity in the market increases.E) None of the above
F) A) and C)

Question 14

A concentration ratio

Accepted Answer

A)   measures the percentage of total output supplied by the four largest firms in the industry.
B)   reflects the level of competition in an industry.
C)   is related to the control that each firm has over price.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 15

In markets where restrictions on advertising have been used to curtail competition,the U.S.courts have generally

Accepted Answer

A)   referred the matters of advertising restrictions to executive regulators.
B)   enforced industry-wide agreements to restrict advertising.
C)   been silent on the effect of explicit advertising restrictions.
D)   overturned laws that prohibit advertising.E) A) and B)
F) B) and C)

Question 16

Which of the following industries has the highest concentration ratio?

Accepted Answer

A)   wheat
B)   novels
C)   cigarettes
D)   dog foodE) B) and C)
F) A) and D)

Question 17

A monopolistically competitive market

Accepted Answer

A)   has some features of monopoly and some features of competition.
B)   has one large, dominant firm and many other smaller firms.
C)   is difficult to enter.
D)   occurs whenever firms earn zero economic profit.E) C) and D)
F) None of the above

Question 18

Figure 16-9
The figure is drawn for a monopolistically-competitive firm.
 
-Refer to Figure 16-9.In order to maximize its profit,the firm will choose to produce

Accepted Answer

A)   100 units of output.
B)   between 100 and 133.33 units of output.
C)   133.33 units of output.
D)   154.92 units of output.E) None of the above
F) A) and B)

Question 19

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.
 
-Refer to Table 16-3.Which industry has the lowest concentration ratio?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) All of the above
F) A) and C)

Question 20

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

Accepted Answer

A) True 
 B)False

Exam 16: Monopolistic Competition.

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.Which industry has the lowest concentration ratio?

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Which of the following conditions is characteristic of a monopolistically competitive firm in long-run equilibrium?

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Which of the following industries has the highest concentration ratio?

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The product-variety externality and the business-stealing externality are both spillover benefits of new firms entering a monopolistically competitive market.

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A monopolistically competitive market has characteristics that are similar to

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Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

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Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2.Which industry has the lowest concentration ratio?

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Which of the following is a characteristic of monopolistic competition?

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Monopolistic competition is the only market structure that features many sellers.

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Table 16-6 Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling. -Refer to Table 16-6.When maximizing profit,what price does Traci's charge for a haircut?

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A concentration ratio

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Evaluate the following statement: "Advertisements that use celebrity endorsements are devoid of any value and do not enhance the efficient functioning of markets."

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The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York.This is an example of a brand name enhancing market efficiency for U.S.tourists visiting the Philippines.

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Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9.In order to maximize its profit,the firm will choose to produce

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In markets where restrictions on advertising have been used to curtail competition,the U.S.courts have generally

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A monopolistically competitive market

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Monopolistic competition is considered inefficient because

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As firms exit a monopolistically competitive market,profits of remaining firms

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Which of the following statements is not correct?

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If we observe a great deal of advertising of dog food,we can infer that

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Some people argue that celebrity endorse...
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