Question 1

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Accepted Answer

A)   increase production.
B)   decrease production.
C)   not change its production because it is maximizing its profit.
D)   Not enough information is given to determine what La Super Rica should do.E) All of the above
F) B) and C)

Question 2

In the short run, a monopolistically competitive firm chooses

Accepted Answer

A)   both its price and its quantity.
B)   its price but not its quantity.
C)   its quantity but not its price.
D)   neither its price nor its quantity.E) C) and D)
F) B) and C)

Question 3

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

Accepted Answer

A)   producing 8 units and charging a price of $5.
B)   producing 8 units and charging a price of $15.
C)   producing 16 units and charging a price of $10.
D)   producing 20 units and charging a price of $25.E) A) and D)
F) All of the above

Question 4

What is a firm's markup? What does it show?

Accepted Answer

A firm's markup is the amount ...

Question 5

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

Accepted Answer

The key to long-run economic profits is ...

Question 6

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Accepted Answer

A)   P = ATC = MC = MR
B)   P = ATC
C)   ATC = MC
D)   P = MCE) C) and D)
F) A) and B)

Question 7

The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000. Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000 and the streaming price remains constant. What is Karaoke Channel Online's total profit before the advertising begins?

Accepted Answer

A)   $66,500
B)   $99,500
C)   $64,500
D)   $76,500E) A) and B)
F) C) and D)

Question 8

The best example of a good sold in a monopolistically competitive market is

Accepted Answer

A)   pizza.
B)   corn.
C)   sewer services.
D)   peaches.E) All of the above
F) C) and D)

Question 9

Advertising costs of a monopolistically competitive firm are

Accepted Answer

A)   greater than a monopoly and the same as a perfectly competitive firm.
B)   greater than a perfectly competitive firm.
C)   less than a perfectly competitive firm.
D)   the same as a monopoly.E) B) and C)
F) A) and D)

Question 10

All of the following characteristics apply to monopolistic competition EXCEPT

Accepted Answer

A)   a large number of firms compete.
B)   each firm produces the same identical product.
C)   firms compete on product quality, price, and marketing.
D)   there are no barriers to enter or exit the industry.E) A) and B)
F) All of the above

Question 11

In the short run, for a firm in monopolistic competition

Accepted Answer

A)   the firm's economic profit must equal zero.
B)   marginal revenue exceeds marginal cost.
C)   price exceeds marginal cost.
D)   the firm is a price taker.E) A) and B)
F) None of the above

Question 12

In the long run, a firm in a monopolistically competitive industry has its price equal to its

Accepted Answer

A)   average total cost.
B)   marginal cost.
C)   marginal revenue.
D)   elasticity of demand.E) None of the above
F) A) and B)

Question 13

Which characteristic is associated with monopolistic competition?

Accepted Answer

A)   collusion
B)   product differentiation
C)   small number of firms
D)   awareness of rival firms in the marketE) None of the above
F) C) and D)

Question 14

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves.
II)  have marginal revenue curves that lie beneath their demand curves.
III)  can make an economic profit in the long run.

Accepted Answer

A)   I only.
B)   I and II.
C)   I, II, and III.
D)   I and III.E) A) and C)
F) C) and D)

Question 15

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

Accepted Answer

The efficient scale is the quantity prod...

Question 16

In the long-run, a firm in monopolistic competition has

Accepted Answer

A)   a price that exceeds its average total cost.
B)   a price that exceeds its marginal cost.
C)   an average total cost that exceeds its price.
D)   a marginal cost that exceeds its price.E) All of the above
F) A) and B)

Question 17

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

Accepted Answer

A)   J Brand will shut down in the short run and go out of business in the long run.
B)   J Brand will produce in the short run but go out of business in the long run.
C)   J Brand will produce in the short run and shut down in the long run.
D)   J Brand will produce in the short and long run.E) All of the above
F) A) and B)

Question 18

The figure shows the demand curve for Gap jackets (D) , and Gap's marginal revenue curve (MR) , marginal cost curve (MC) , and average total cost curve (ATC) .
-In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

Accepted Answer

A)   100
B)   64
C)   129
D)   133E) B) and C)
F) A) and D)

Question 19

Firms in which type of market make zero economic profit in the long run?

Accepted Answer

A)   perfect competition and monopolistic competition
B)   monopoly
C)   perfect competition
D)   monopolistic competitionE) A) and B)
F) A) and C)

Question 20

Firms in monopolistic competition can make an economic profit in the long run.

Accepted Answer

A) True 
 B)False

Exam 14: Monopolistic Competition

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

Correct Answer
verified
The key to long-run economic profits is ...
View Answer

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Correct Answer
verified

All of the following characteristics apply to monopolistic competition EXCEPT

Correct Answer
verified

In the short run, for a firm in monopolistic competition

Correct Answer
verified

The best example of a good sold in a monopolistically competitive market is

Correct Answer
verified

The figure shows the demand curve for Gap jackets (D) , and Gap's marginal revenue curve (MR) , marginal cost curve (MC) , and average total cost curve (ATC) . -In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

Correct Answer
verified

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

Correct Answer
verified
The efficient scale is the quantity prod...
View Answer

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

Correct Answer
verified

In the long run, a firm in a monopolistically competitive industry has its price equal to its

Correct Answer
verified

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make an economic profit in the long run.

Correct Answer
verified

Which characteristic is associated with monopolistic competition?

Correct Answer
verified

Advertising costs of a monopolistically competitive firm are

Correct Answer
verified

In the short run, a monopolistically competitive firm chooses

Correct Answer
verified

What is a firm's markup? What does it show?

Correct Answer
verified
A firm's markup is the amount ...
View Answer

Firms in which type of market make zero economic profit in the long run?

Correct Answer
verified

Firms in monopolistic competition can make an economic profit in the long run.

Correct Answer
verified

Correct Answer
verified

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Correct Answer
verified

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

Correct Answer
verified

In the long-run, a firm in monopolistic competition has

Correct Answer
verified

Exam 14: Monopolistic Competition

A monopoly firm can make economic profit in the long run. A firm in monopolistic competition cannot. What creates this difference?

Correct AnswerverifiedThe key to long-run economic profits is ...View AnswerShow Answer

La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious. If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should

Correct AnswerverifiedShow Answer

All of the following characteristics apply to monopolistic competition EXCEPT

Correct AnswerverifiedShow Answer

In the short run, for a firm in monopolistic competition

Correct AnswerverifiedShow Answer

The best example of a good sold in a monopolistically competitive market is

Correct AnswerverifiedShow Answer

The figure shows the demand curve for Gap jackets (D) , and Gap's marginal revenue curve (MR) , marginal cost curve (MC) , and average total cost curve (ATC) . -In the figure above, Gap maximizes its profit if it sells ________ jackets per day.

Correct AnswerverifiedShow Answer

Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity.

Correct AnswerverifiedThe efficient scale is the quantity prod...View AnswerShow Answer

-The above figure shows the demand and cost curves for a monopolistically competitive firm in the long run. The firm maximizes its profit by

Correct AnswerverifiedShow Answer

In the long run, a firm in a monopolistically competitive industry has its price equal to its

Correct AnswerverifiedShow Answer

A monopolistically competitive firm and a monopoly are alike because both I. face downward sloping demand curves. II) have marginal revenue curves that lie beneath their demand curves. III) can make an economic profit in the long run.

Correct AnswerverifiedShow Answer

Which characteristic is associated with monopolistic competition?

Correct AnswerverifiedShow Answer

Advertising costs of a monopolistically competitive firm are

Correct AnswerverifiedShow Answer

In the short run, a monopolistically competitive firm chooses

Correct AnswerverifiedShow Answer

What is a firm's markup? What does it show?

Correct AnswerverifiedA firm's markup is the amount ...View AnswerShow Answer

Firms in which type of market make zero economic profit in the long run?

Correct AnswerverifiedShow Answer

Firms in monopolistic competition can make an economic profit in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is TRUE regarding the long run for a firm in monopolistic competition?

Correct AnswerverifiedShow Answer

Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. J Brand jeans sell for $200 a pair. Suppose at the profit maximizing quantity, J Brand's ATC was $220 and AVC was $110, which statement is TRUE?

Correct AnswerverifiedShow Answer

In the long-run, a firm in monopolistic competition has

Correct AnswerverifiedShow Answer

Correct Answer
verified
The key to long-run economic profits is ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The efficient scale is the quantity prod...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A firm's markup is the amount ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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