Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 12 Test Bank Key
1. Which of the following characterizes monopolistic competition?
A. Many interdependent firms sell a homogeneous product.
services, and therefore each maintains some independent control of its own price.
2. Monopolistically competitive industries are characterized by all of the following except
A. Homogenous products.
3. In monopolistic competition, a firm
A. Has no market power.
4. Which of the following industries is not an example of monopolistic competition?
5. If there are many firms in an industry producing goods that are similar but slightly different, this is an example
of
6. Which of the following is not characteristic of monopolistic competition?
A. Many firms in an industry.
7. A concentration ratio measures the
A. Proportion of industry output produced by all firms.
Topic: STRUCTURE
8. The combined market share of the top four firms in a monopolistically competitive industry will typically be in the
range of
A. Zero to 2 percent.
9. A monopolistically competitive industry is characterized by ________ concentration ratios and ________
entry barriers.
A. high; high
10. A major difference between oligopoly and monopolistic competition is that oligopolies do not
11. Each producer in monopolistic competition has
12. The demand curve faced by a monopolistically competitive firm is
A. Downward-sloping.
13. Which of the following is similar for oligopoly and monopolistic competition?
14. One of the main differences between an oligopoly and a monopolistically competitive firm is that
a monopolistically competitive firm
15. If a monopolistically competitive firm raises its price, it will
A. Not lose any of its customers.
16. The kinked oligopoly demand curve does not describe the demand curve for monopolistic competition
because in monopolistically competitive markets,
17. A major difference between monopoly and monopolistic competition is
A. One maximizes profits by setting MR equal to MC, and the other does not.
18. Entry into a market characterized by monopolistic competition is generally
19. Monopolistically competitive firms have a "monopoly" element to them because
A. There is only one seller.
20. The competitive dimension of monopolistic competition is that
21. Which of the following most characterizes monopolistic competition?
22. Product differentiation refers to
23. Product differentiation occurs when
A. A completely new process is used to produce a familiar product.
24. Which of the following is an example of product differentiation?
25. Large cities typically have many drugstores that offer different levels of service and product selection. The
drugstore market in big cities can best be classified as
26. The main difference between perfect competition and monopolistic competition is
27. A monopolistically competitive firm can raise its price somewhat without fear of great change in unit
sales because
28. A monopolistically competitive firm can raise its price somewhat without fear of great change in unit
sales because of
29. Brand loyalty usually makes the demand curve for a product
30. The cross-price elasticity of demand for the products of monopolistically competitive firms is
31. Cross price elasticity measures
A. The change in quantity demanded for one good due to a change in the price of another good.
32. Brand loyalty
33. When a monopolistically competitive firm advertises, it is attempting to increase
34. Firms in a monopolistically competitive market will
35. A monopolistically competitive firm maximizes profits or minimizes losses in the short run by
A. Setting price equal to marginal cost.
36. If a monopolistic competitor is maximizing profit, it is producing at a point where marginal cost
37.
Refer to Table 26.1. In order to maximize profit, Will's Beach Ball Company should produce _______ and
charge a price of _______ each.
38.
Refer to Table 26.1. At the profit-maximizing output and price, Will's Beach Ball Company will earn a profit
equal to
39.
Refer to Table 26.1. At the profit-maximizing output and price, Will's Beach Ball Company will earn a ________
economic profit, and ________ the market will occur.
40.
Refer to Table 26.2. To maximize profit, Sylvie's Shampoo Company. should produce _______ bottles
of shampoo and charge a price of _______ each.
41.
Refer to Table 26.2. At the profit-maximizing output and price, Sylvie's Shampoo Company. will earn a
profit equal to
42.
Refer to Table 26.2. At the profit-maximizing output and price, Sylvie's Shampoo Company. will earn a
________ economic profit, and ________ the market will occur.
43. Entry into a market characterized by monopolistic
competition A. Is rare because firms have market power.
44. In monopolistic competition, a firm's demand curve is tangent to the ATC curve in the long run because
45. In a monopolistically competitive market with negative economic profits,
46. If economic profits are earned in a monopolistically competitive market,
47. In monopolistic competition, if economic profits are being earned, which of the following will not happen?
48. In monopolistic competition, the entry of new firms will cause all of the following to happen except
49. When new firms enter a monopolistically competitive industry, the market
50. When new firms enter a monopolistically competitive industry, ceteris paribus, the
A. Market price decreases.
51. If new firms enter a monopolistically competitive market, the demand curves for the existing firms will shift to
the
52. If new firms enter a monopolistically competitive market, the demand curves for the existing firms will
53. Which of the following characterizes monopolistic
competition? A. Price leadership.
54. Which of the following is not true about a monopolistic competitor?
55. Both perfect competitors and monopolistic competitors
56. Which of the following characterizes the difference between oligopoly and monopolistic competition?
57. One of the reasons for low cross-price elasticity in monopolistic competition and high cross-price elasticity in
perfect competition is that
A. Firms in perfect competition differentiate their products.
58. For which of the following market structures will the firm's demand curve be tangent to the ATC curve in the
60. Which of the following is true about a monopolistically competitive firm in the long
run? A. It is as efficient as a purely competitive firm.
61. Which of the following market structures will have only normal profit in the long run?
62. Which of the following market structures will have higher prices in the long run than perfect competition,
ceteris paribus?
63. Which of the following market structures will have lower prices in the long run than monopoly, ceteris paribus?
64. Which of the following market structures will have lower output in the long run than perfect competition,
ceteris paribus?
65. Which of the following market structures will have higher output in the long run than monopolistic
competition, ceteris paribus?
66. Which of the following is true about a monopolistically competitive industry?
67. Monopolistic competition results in
68. Which of the following real-world situations is the result of excess capacity in a monopolistically competitive
market?
69. Monopolistically competitive firms are productively inefficient because long-run equilibrium occurs at an output
rate where
A. MC is greater than MR.
