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It has been argued that a monopolistically competitive indus

Paper help Economics It has been argued that a monopolistically competitive indus

Economics

It has been argued that a monopolistically competitive indus

It has been argued that a monopolistically competitive industry involves “waste”… Show more Question 1 It has been argued that a monopolistically competitive industry involves “waste” because Question 1 options: there is too much product differentiation making shelves too crowded. the firms do not produce at the minimum of the average total cost curve and price is above marginal cost. they end up producing to the right of the minimum of the average total cost curve and the price is below the marginal cost. the firms do not equate marginal cost to marginal revenue to find the profit maximizing price and output. Question 2 The major similarity between monopolistic competition and perfect competition is Question 2 options: the shape of the demand curve. that both assume many buyers and sellers. price equals marginal revenue in each. both assume products are differentiated. Question 3 Refer to the above figure. Which panel shows a possible short-run equilibrium for monopolistic competition, but is not also a long-run equilibrium? Question 3 options: Panel A. Panel B. Panel C. Panel D. Question 4 The long-run equilibrium for a firm in an information product industry is when the firm produces the quantity Question 4 options: where marginal cost equals marginal revenue. where the demand curve crosses the marginal cost curve. which is at the minimum of the average total cost curve. where the demand curve is tangent to the average total cost curve. Question 5 The number of firms in a monopolistically competitive industry means that Question 5 options: firms will collude. firms will try to set a common price. existing firms in the industry will make sure new firms do not enter. firms will not cooperate to set a pure monopoly price. Question 6 Average total cost for an information product would Question 6 options: remain constant as quantity increases. increase constantly as quantity increases. first decrease and then increase as quantity increases. decrease constantly as quantity increases. Question 7 Refer to the above figure. The above figure shows the cost structure of a firm producing an information product. Which curve would represent the average variable cost? Question 7 options: Curve 1 Curve 2 Curve 3 none of the above Question 8 In the short run, the monopolistic competitor is just like the perfect competitor in that Question 8 options: either competitor can make profits, losses, or break even in the short run. each equates marginal revenue and marginal cost in order to maximize profits, with the result that price exceeds marginal revenue. new firms enter in the short run when firms are making profits. equilibrium is determined by setting price equal to marginal cost. Question 9 Average variable cost for an information product would Question 9 options: remain constant as quantity increases. decrease constantly as quantity increases. first decrease and then increase as quantity increases. increase constantly as quantity increases. Question 10 A monopolistic competitor is in long-run equilibrium when Question 10 options: profits are equal to zero and the average total cost curve is tangent to the demand curve. profits are greater than zero and the marginal cost curve is tangent to the demand curve. profits are greater than zero and the average total cost curve is tangent to the demand curve. profits are equal to zero and the marginal cost curve is tangent to the demand curve. Question 11 When firms make short-run losses under monopolistic competition, Question 11 options: some firms would like to exit the industry but find they cannot. firms increase prices further, until they make at least a normal return. firms increase advertising spending to increase demand, until they make at least a normal return. some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they make a normal profit. Question 12 Direct marketing is Question 12 options: advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. advertising targeted at specific consumers. advertising intended to reach as many consumers as possible. advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders. Question 13 In the short-run, a monopolistically competitive firm can earn Question 13 options: zero or positive profits only. zero profits only. zero, positive or negative profits. positive profits only. Question 14 A good that entails relatively high fixed costs associated with the use of knowledge and other information-intensive inputs as key factors of production is Question 14 options: a persuasive good. a logo good. an information product. a search good. Question 15 Persuasive advertising is mostly used for Question 15 options: a logo good. an experience good. a search good. a persuasive good. Question 16 A credence good is a product Question 16 options: with characteristics that enable an individual to evaluate the product’s quality in advance of a purchase. with qualities that consumers lack the expertise to assess without assistance. that an individual must consume before the quality can be established. that emphasizes the features of its product. Question 17 Long-run equilibrium for a monopolistic competitor is characterized by Question 17 options: excess capacity. economic profits. too few firms in the industry. marginal cost pricing. Question 18 The demand curve for a monopolistic competitor firm is Question 18 options: more elastic than for a monopoly firm. more inelastic than for a monopoly firm. the same elasticity as a perfectly competitive firm. more elastic than for a perfectly competitive firm. Question 19 Products can be differentiated Question 19 options: by location and by brand name. only by brand name. if the buyers are homogeneous and their number increases. none of the above Question 20 Which of the following statements is true about the profit for a monopolistic competitor firm in the long-run? Question 20 options: Profits can be positive since firms have some degree of monopoly power. Profits will tend towards zero since positive profits will attract new firms into the industry. Profits will be positive since the firm has a downward sloping demand curve. Profits can be negative since there is so much competition in the market. • Show less

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