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New firms are able to enter monopolistically competitive markets because there are low barriers to entry.

A) True
B) False

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What are the key factors that determine the profitability of a firm in a monopolistically competitive market?

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A monopolistically competitive firm's pr...

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Central Grocery in New Orleans is famous for its muffaletta,a large round sandwich filled with deli meats and topped with a tangy olive salad.Suppose the following table represents cost and revenue data for Central Grocery.Fill in the columns for TR,MR,MC,ATC,and profit.If Central Grocery wants to maximize profits,what price should it charge for a muffaletta,what quantity should it sell,and what will be the amount of its total profit?  Muffalettas  Sold per  Day  Price (P) Total  Revenue (TR) Marginal  Revenue (MR) Total  Cost (TC) Average  Marginal  Cost (MC) Total Cost (ATC) Profit 0$15$121141821320312214112351026693078358742965210578\begin{array}{|c|c|c|c|c|c|c|c|}\hline \begin{array}{c}\text { Muffalettas } \\\text { Sold per } \\\text { Day }\end{array} & \begin{array}{c}\text { Price } \\(\boldsymbol{P})\end{array} & \begin{array}{c}\text { Total } \\\text { Revenue } \\(\boldsymbol{T R})\end{array} & \begin{array}{c}\text { Marginal } \\\text { Revenue } \\(\boldsymbol{M R})\end{array} & \begin{array}{c}\text { Total } \\\text { Cost } \\(\boldsymbol{T} \boldsymbol{C})\end{array} & \begin{array}{c}\text { Average } \\\text { Marginal } \\\text { Cost }(\boldsymbol{M C})\end{array} & \begin{array}{c}\text { Total Cost } \\(\boldsymbol{A} \boldsymbol{T} \boldsymbol{C})\end{array} & \text { Profit } \\\hline 0 & \$ 15 & & & \$ 12 & & & \\\hline 1 & 14 & & & 18 & & & \\\hline 2 & 13 & & & 20 & & & \\\hline 3 & 12 & & & 21 & & & \\\hline 4 & 11 & & & 23 & & & \\\hline 5 & 10 & & & 26 & & & \\\hline 6 & 9 & & & 30 & & & \\\hline 7 & 8 & & & 35 & & & \\\hline 8 & 7 & & & 42 & & & \\\hline 9 & 6 & & & 52 & & & \\\hline 10 & 5 & & & 78 & & & \\\hline\end{array}

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To maximize profits,Central Gr...

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Which of the following is a disadvantage of trademarking a firm's product?


A) A trademark differentiates a firm's product.
B) A trademark conveys information about the product to the public.
C) A trademark may become so widely used to denote a particular type of product that the trademark may no longer be a legally protected brand name.
D) A trademark does not affect demand for the firm's product.

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

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Assume that price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118,then to maximize profits the firm should increase its output.

A) True
B) False

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Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?


A) The firm's demand curve will shift to the right if it stays in business in the long run.
B) The firm will exit the industry if it continues to suffer economic losses.
C) The firm will break even if its stays in business in the long run.
D) In the long run the firm will be able to charge a price that is greater than its average total cost.

E) A) and B)
F) B) and C)

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Figure 13-19 Figure 13-19 -Refer to Figure 13-19 to answer the following questions. a.What is the productively efficient output? b.What is the allocatively efficient output? c.What is the amount of excess capacity? d.Suppose the firm is currently producing 14 units.What happens if it increases output to 17 units? -Refer to Figure 13-19 to answer the following questions. a.What is the productively efficient output? b.What is the allocatively efficient output? c.What is the amount of excess capacity? d.Suppose the firm is currently producing 14 units.What happens if it increases output to 17 units?

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a.The productively efficient output is 2...

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 Quantity  Price  (dollars)   Total Revenue  (dollars)   Total Variable  Cost (dollars)   Total Cost  (dollars)  0$21$0$0$50120201666219383181318544595417685910951680751256159093143714981121628131041401909121081802301011110230280\begin{array} { | c | c | c | c | c | } \hline \text { Quantity } & \begin{array} { c } \text { Price } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Total Revenue } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Total Variable } \\\text { Cost (dollars) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (dollars) }\end{array} \\\hline 0 & \$ 21 & \$ 0 & \$ 0 & \$ 50 \\\hline 1 & 20 & 20 & 16 & 66 \\\hline 2 & 19 & 38 & 31 & 81 \\\hline 3 & 18 & 54 & 45 & 95 \\\hline 4 & 17 & 68 & 59 & 109 \\\hline 5 & 16 & 80 & 75 & 125 \\\hline 6 & 15 & 90 & 93 & 143 \\\hline 7 & 14 & 98 & 112 & 162 \\\hline 8 & 13 & 104 & 140 & 190 \\\hline 9 & 12 & 108 & 180 & 230 \\\hline 10 & 11 & 110 & 230 & 280 \\\hline\end{array} Table 13-3 shows the demand and cost schedules for a monopolistically competitive firm. -Refer to Table 13-3.What is its average variable cost of production at its optimal output level?


A) $0 (because its optimal output = 0)
B) $15
C) $14.75
D) $29

E) A) and B)
F) All of the above

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When a firm faces a downward-sloping demand curve,marginal revenue


A) must exceed price because the price effect outweighs the output effect.
B) is less than price because a firm must lower its price to sell more.
C) equals price because the firm sells a standardized product.
D) must exceed price because the output effect outweighs the price effect.

E) C) and D)
F) All of the above

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Long-run equilibrium under monopolistic competition and perfect competition is similar in that


A) firms produce at the minimum point of their average cost curves.
B) price equals marginal cost.
C) firms break even.
D) price equals marginal revenue.

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

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Figure 13-13 Figure 13-13 -Refer to Figure 13-13.If the diagram represents a typical firm in the market,what is likely to happen to its average cost of production in the long run? A) It will probably fall since the firm must be cost efficient to remain competitive. B) It will probably fall since the firm will be selling less than its current amount. C) It will probably rise since the firm will be producing less than its current amount. D) It will probably rise since its long-run demand is likely to be higher. -Refer to Figure 13-13.If the diagram represents a typical firm in the market,what is likely to happen to its average cost of production in the long run?


A) It will probably fall since the firm must be cost efficient to remain competitive.
B) It will probably fall since the firm will be selling less than its current amount.
C) It will probably rise since the firm will be producing less than its current amount.
D) It will probably rise since its long-run demand is likely to be higher.

E) All of the above
F) None of the above

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Figure 13-13 Figure 13-13 -Refer to Figure 13-13.If the diagram represents a typical firm in the market,what is likely to happen in the long run? A) Some firms will exit the market causing the demand to increase for firms remaining in the market. B) New firms will enter the market causing the demand to decrease for existing firms. C) Inefficient firms will exit the market and new cost-efficient firms will enter the market. D) Competition will be intensified as firms strive to make long-run profits. -Refer to Figure 13-13.If the diagram represents a typical firm in the market,what is likely to happen in the long run?


A) Some firms will exit the market causing the demand to increase for firms remaining in the market.
B) New firms will enter the market causing the demand to decrease for existing firms.
C) Inefficient firms will exit the market and new cost-efficient firms will enter the market.
D) Competition will be intensified as firms strive to make long-run profits.

E) B) and C)
F) A) and B)

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After selling 1,000 three-ring binders Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that


A) Tony's business earns a short-run economic profit.
B) Tony should shut down his business temporarily.
C) Tony's profit fell after selling his 1,000th three-ring binder.
D) Tony's profit would be greater if he sold an additional three-ring binder.

E) A) and C)
F) B) and C)

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Figure 13-18 Figure 13-18 -Refer to Figure 13-18.Which of the following statements is true? A) Da represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the demand curve in the short run. B) Da represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the long-run demand curve in an increasing-cost industry. C) Da represents the long-run demand curve facing a perfect competitor while Db depicts the long-run demand curve facing a monopolistic competitor. D) Da represents the long-run supply curve in a perfectly competitive,constant-cost industry while Db depicts the long-run demand curve facing a monopolistic competitor in a decreasing-cost industry. -Refer to Figure 13-18.Which of the following statements is true?


A) Da represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the demand curve in the short run.
B) Da represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Db depicts the long-run demand curve in an increasing-cost industry.
C) Da represents the long-run demand curve facing a perfect competitor while Db depicts the long-run demand curve facing a monopolistic competitor.
D) Da represents the long-run supply curve in a perfectly competitive,constant-cost industry while Db depicts the long-run demand curve facing a monopolistic competitor in a decreasing-cost industry.

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

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Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4.If the firm represented in the diagram is currently producing and selling Qa units,what is the price charged? A) P0 B) P1 C) P2 D) P3 Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 13-4.If the firm represented in the diagram is currently producing and selling Qa units,what is the price charged?


A) P0
B) P1
C) P2
D) P3

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

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A firm that successfully differentiates its product or lowers its average cost of production creates


A) value for its customers.
B) entry barriers into its market.
C) a perfectly inelastic demand curve for its product.
D) economies of scale.

E) A) and B)
F) B) and D)

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How might a monopolistically competitive firm continually earn economic profit greater than zero?

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A monopolistically competitive...

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When a monopolistically competitive firm cuts its price to increase its sales,it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect.

A) True
B) False

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A monopolistically competitive firm that earns an accounting profit in the short run


A) must also earn an economic profit in the short run.
B) does not earn enough to earn an economic profit in the short run.
C) could earn an economic profit,break even,or suffer an economic loss in the short run.
D) could earn an economic profit or break even,but could not suffer an economic loss in the short run.

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

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________ describes the actions a firm takes to maintain the differentiation of its product over time.


A) Product differentiation
B) Brand management
C) Aggressive marketing
D) Advertising

E) All of the above
F) None of the above

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Showing 41 - 60 of 272

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