Question 1

If firms in a particular market sell similar or identical products, then the market is
(i) perfectly competitive.
(ii) monopolistically competitive.
(iii) an oligopoly.

Accepted Answer

A)  (i)  or (ii)  only
B)  (ii)  or (iii)  only
C)  (i)  or (iii)  only
D)  (i)  onlyE) All of the above
F) A) and B)

Question 2

Which market structure(s) include(s) many firms with differentiated products who can enter and exit the market freely?

Accepted Answer

monopolist...

Question 3

The free entry and exit of firms in a monopolistically competitive market guarantees that

Accepted Answer

A)  both economic profits and economic losses can persist in the long run.
B)  both economic profits and economic losses disappear in the long run.
C)  economic profits, but not economic losses, can persist in the long run.
D)  economic losses, but not economic profits, can persist in the long run.E) None of the above
F) A) and B)

Question 4

Which market structure(s) is(are) imperfectly competitive?

Accepted Answer

oligopoly
...

Question 5

A law that restricts the ability of hotels/motels to advertise on billboards outside of a resort community would likely lead to

Accepted Answer

A)  no change in profits for all hotels/motels.
B)  reduced efficiency of local lodging markets.
C)  a request by consumers to increase the number of billboards.
D)  increased price competition among hotels/motels in the community.E) All of the above
F) A) and B)

Question 6

Which market structure(s) is(are) imperfectly competitive?

Accepted Answer

oligopoly
...

Question 7

Describe the shape of the monopolistically competitive firm's demand curve.

Accepted Answer

The answer of Describe the shape of the monopolistically competitive...

Question 8

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses, Benham found that

Accepted Answer

A)  the average price paid for eyeglasses was nearly 20% higher in the states that did not restrict advertising.
B)  the average price paid for eyeglasses was nearly 20% lower in the states that did not restrict advertising.
C)  there was no difference in the average price paid between states that restricted advertising and those that did not.
D)  the average price paid for eyeglasses was almost 5 times higher in the states that did not restrict advertising.E) A) and B)
F) None of the above

Question 9

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Accepted Answer

business-s...

Question 10

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) B) and C)
F) A) and D)

Question 11

In which of the following market structures do firms produce the welfare-maximizing level of output?

Accepted Answer

A)  perfect competition
B)  monopolistic competition
C)  monopoly
D)  Both a and b are correct.E) All of the above
F) None of the above

Question 12

Figure 16-9
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-9. 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

Accepted Answer

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

Question 13

When a firm operates with excess capacity,

Accepted Answer

A)  additional production would lower the average total cost.
B)  additional production would increase the average total cost.
C)  it must be a perfectly competitive firm.
D)  it must be a monopolistically competitive firm.E) A) and C)
F) B) and D)

Question 14

Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n) (i) imperfectly competitive market.
(ii) monopoly market.
(iii) oligopoly market.

Accepted Answer

A)  (i)  and (ii)  only
B)  (ii)  and (iii)  only
C)  (i)  and (iii)  only
D)  (iii)  onlyE) A) and B)
F) A) and C)

Question 15

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries. 
-Refer to Table 16-1. What is the concentration ratio in Industry C?

Accepted Answer

A)  13%
B)  32%
C)  52%
D)  84%E) All of the above
F) B) and C)

Question 16

A monopolistically competitive firm faces a downward-sloping demand curve because there are few firms in the market.

Accepted Answer

A) True 
 B)False

Question 17

Figure 16-12 
-Refer to Figure 16-12. What is the efficient scale of production?

Accepted Answer

A)  This firm cannot produce efficiently.
B)  12 units
C)  22 units
D)  28 unitsE) B) and C)
F) A) and D)

Question 18

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) A) and B)
F) C) and D)

Question 19

Figure 16-14 
-Refer to Figure 16-14. 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?

Accepted Answer

The answer of Figure 16-14 
-Refer to Figure 16-14. The...

Question 20

Since a firm in a monopolistically competitive market faces a

Accepted Answer

A)  downward-sloping demand curve, it will always operate with excess capacity.
B)  downward-sloping demand curve, it will always operate at its efficient scale.
C)  perfectly elastic demand curve, it will always operate with excess capacity.
D)  perfectly inelastic demand curve, it will always operate at its efficient scale.E) C) and D)
F) None of the above

Exam 16: Monopolistic Competition

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

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If firms in a particular market sell similar or identical products, then the market is (i) perfectly competitive. (ii) monopolistically competitive. (iii) an oligopoly.

Correct AnswerverifiedShow Answer

Which market structure(s) is(are) imperfectly competitive?

Correct Answerverifiedoligopoly...View AnswerShow Answer

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

Correct Answerverifiedbusiness-s...View AnswerShow Answer

A law that restricts the ability of hotels/motels to advertise on billboards outside of a resort community would likely lead to

Correct AnswerverifiedShow Answer

Figure 16-14 -Refer to Figure 16-14. 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?

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Figure 16-9 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-9. 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

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Describe the shape of the monopolistically competitive firm's demand curve.

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A monopolistically competitive firm faces a downward-sloping demand curve because there are few firms in the market.

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Since a firm in a monopolistically competitive market faces a

Correct AnswerverifiedShow Answer

In Lee Benham's 1972 article examining the impact of advertising on the average price paid for a pair of eyeglasses, Benham found that

Correct AnswerverifiedShow Answer

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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Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an example of a(n) (i) imperfectly competitive market. (ii) monopoly market. (iii) oligopoly market.

Correct AnswerverifiedShow Answer

Which market structure(s) include(s) many firms with differentiated products who can enter and exit the market freely?

Correct Answerverifiedmonopolist...View AnswerShow Answer

In which of the following market structures do firms produce the welfare-maximizing level of output?

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Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1. What is the concentration ratio in Industry C?

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When a firm operates with excess capacity,

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The free entry and exit of firms in a monopolistically competitive market guarantees that

Correct AnswerverifiedShow Answer

Figure 16-12 -Refer to Figure 16-12. What is the efficient scale of production?

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Which market structure(s) is(are) imperfectly competitive?

Correct Answerverifiedoligopoly...View AnswerShow Answer

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oligopoly
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business-s...
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monopolist...
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oligopoly
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