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Exam 16: Monopolistic Competition

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Question 21

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The general term for market structures that fall somewhere between monopoly and perfect competition is

A) incomplete markets.
B) imperfectly competitive markets.
C) oligopoly markets.
D) monopolistically competitive markets.

E) A) and B)
F) None of the above

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Question 22

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A downward-sloping demand curve

A) is a feature of all monopolistically competitive firms.
B) means that the firm in question will never experience a zero profit.
C) causes marginal revenue to exceed price.
D) prohibits firms from earning positive economic profits in the long run.

E) B) and D)
F) A) and D)

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Question 23

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Edward Chamberlin argued that governments should

The government may not be able to improve the inefficiencies of a monopolistically competitive market.

Figure 16-11 -Refer to Figure 16-11. If this firm profit-maximizes, how much cost will it incur?

Suppose there is a market in which the firms hold the following market shares: 25%, 20%, 18%, 15%, 8%, 7%, 4%, 2%, 1%. What is the concentration ratio for this market?

The typical firm in the US economy

Scenario 16-2 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-2. If the marginal cost of producing this good is 4, what quantity would a profit-maximizing monopolist produce?

Which of the following is not an example of Joel Waldfogel's "Tyranny of the Market"?

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. Which industry has the highest concentration ratio?

Scenario 16-9 Dean goes to the grocery store to buy chips and soda for a party. He purchases brand name products even though generic versions are available at lower prices. His friend John says he was irrational to spend more for a nearly identical product. His friend Martina agreed with Dean's decision to spend more for the brand name products. -Refer to Scenario 16-9. If Dean bought the brand name because of advertising he saw for the product, a defender of advertising would say

If "too much choice" is a problem for consumers, it would occur in which market structure(s) ?

Figure 16-12 -Refer to Figure 16-12. Compare the price and marginal cost in this market with price and marginal cost if this were a perfectly competitive market.

Scenario 16-3 Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) -Refer to Scenario 16-3. When Peter maximizes his profits, how much revenue does he earn per day?

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

Figure 16-12 -Refer to Figure 16-12. How much excess capacity does this firm have?

Table 16-6 Beatrice's Birthday Cakes is one bakery among many in the market for birthday cakes. The following table presents cost and revenue data for birthday cakes at Beatrice's. -Refer to Table 16-6. If the government required Beatrice's to produce at the efficient scale of output, how many cakes would Beatrice's sell?

Which of the following statements is not correct?

​A monopolistically competitive firm is currently charging a price of $10 and producing 12,000 units/month. It faces monthly fixed costs of $15,000 and has an average variable cost of $6/unit. In the long run, we would expect:

The administrative burden of regulating price in a monopolistically competitive market is