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C
)
Downward sloping
D
)
Upward sloping
d4)
If a monopolistically competitive firm cuts its price from $10
where it sold 25 units to $9 and sells five more units of output,
its marginal revenue per unit of output is:
A
)
$270.
B
)
$2.50
C
)
$20.
D
)
$4.
c5)
If a monopolistically competitive firm cuts its price from $10
where it sold 25 units to $9 and sells five more units of output,
its marginal revenue is:
A
)
$270.
B
)
$2.50.
C
)
$20.
D
)
$4.
a6)
Monopolistic competition has:
A
)
D
)
marginal revenue equals price.
b8)
If a monopolistically competitive firm is producing at an output
where marginal revenue is $23 and marginal cost is $19, then to
maximize profits the firm will:
A
)
continue to produce the same quantity.
B
)
increase output.
C
)
decrease output.
D
)
shutdown.
c9)
increase output.
C
)
decrease output.
D
)
shutdown.
c11
)
If a monopolistically competitive firm is producing 66 units of
output where marginal revenue equals marginal cost at a price
of $18 and average total cost at that output is $16.55, then its
total profit is:
A
)
$1,188.
B
)
$1,092.30.
C
)
$95.70.
$1.45.
c12
)
If a monopolistically competitive firm is producing 50 units of
output where marginal cost equals marginal revenue, total cost
is $1,674 and total revenue is $2,000, its average profit is:
A
)
$326.
B
)
$40.
C
)
$6.52.
D
)
impossible to determine without additional information.
c13
)
A monopolistically competitive firm maximizing profits will
produce at a price that is:
A
)
equal to marginal cost.
B
)
equal to marginal revenue.
C
)
greater than marginal cost.
D
)
less than marginal revenue.
b1
4)
A monopolistically competitive industry that earns economic
profits in the short run will:
A
)
continue to earn economic profits in the long run.
B
)
experience the entry of new rival firms into the industry in the
long run.
C
)
experience the exit of old firms out of the industry in the long
run.
D
)
experience a rise in demand in the long run.
d1
5)
A monopolistically competitive firm that is earning profits will,
in the long run, experience:
A
)
new rivals entering the market.
B
)
demand decreases.
C
)
demand for the firm's product becomes more elastic.
D
)
all of the above.
c16
)
A monopolistically competitive firm earning profits in the short
run will find the demand for its product decreasing in the long
run because:
A
)
customers have tired of the firm's product.
B
)
consumers' incomes have fallen.
C
)
some of its customers have switched purchases to new entrants
into the market.
D
)
its costs and price has risen.
a17
)
A monopolistically competitive firm earning profits in the short
run will find the demand for its product becoming more elastic
in the long run because:
A
)
more substitutes are available because new rivals have entered
the market.
B
)
the price of the product relative to buyers' incomes has
increased.
C
)
consumers have tired of the firm's product.
D
)
consumers incomes have fallen.
c18
)
A monopolistically competitive firm earning profits in the short
run will find the demand for its product decreasing and
becoming more elastic in the long run as new firms move into
the industry until:
A
)
the original firm is driven into bankruptcy.
B
b1
9)
In the long run, a typical monopolistically competitive firm
will:
A
)
earn an economic profit.
B
)
breakeven.
C
)
incur an economic loss.
D
)
shut down.
b2
0)
If a monopolistically competitive firm breaks even in an
economic sense, the entrepreneur:
A
)
should exit the industry.
B
)
is earning as much in this industry as he or she could anywhere
else.
C
)
avoids having to pay income tax.
D
)
none of the above.
a21
)
as some firms leave, the remaining firms find the demand for
their product increasing.
C
)
as some firms leave, the remaining firms find the demand for
their product becomes more elastic.
D
)
all of the above happen.
d2
3)
Profits earned by monopolistically competitive firms in the
short run typically will decline in the long run because:
A
)
their products are of poor quality.
B
)
buyers realize the products are less differentiated than they
initially believed.
C
)
buyers tire of their products.
D
c31
)
How does the long run equilibrium of a monopolistically
competitive industry differ from that of a perfectly competitive
industry?
A
)
In long-run equilibrium in a monopolistically competitive firm
will earn economic profits.
B
)
In long-run equilibrium in a monopolistically competitive firm
price will be higher than the average cost of production.
C
)
In long-run equilibrium in a monopolistically competitive firm
does not use fully the plant size it built.
D
)
In long-run equilibrium in a monopolistically competitive firm
is allocatively efficient while the perfectly competitive firm is
not.
a32
)
Figure 12.1
b3
4)
The monopolistic competitor in figure 12.1 will produce:
A
)
Q1.
Q2.
Q3.
B
)
C
)
D
)
Q4.
d3
5)
The monopolistic competitor in figure 12.1 will charge:
A
)
P1.
P2.
P3.
B
)
C
)
P4.
b3
6)
The monopolistic competitor in figure 12.1:
A
)
is making a profit.
B
)
is breaking even.
C
)
should shut down.
D
)
is losing money but should operate in the short run.
d3
7)
The productive efficient output for the monopolistic competitor
in figure 12.1 is:
A
)
Q1.
Q2.
Q3.
B
)
C
)
D
)
Q4.
b3
8)
Brand management:
A
)
is picking a brand name for a new product that will attract
attention.
B
)
is the efforts to maintain the differentiation of a product over
time.
C
)
d3
9)
What is the purpose of advertising by a monopolistically
competitive firm?
A
)
Increase demand for the firm's product.
B
)
Make the demand for the firm's product more inelastic.
C
)
Earn more economic profit for the firm.
D
)
Firms advertise for all these reasons.
c40