chapter 16 econ

If the firm were to produce 154.92 units of output,

efficient scale would be realized. ATC would be at its minimum value. the firm would sustain a loss of more than $2,000.

Which of the following industries has the lowest concentration ratio?

electric lamp bulbs

For a profit-maximizing monopolistically competitive firm, marginal revenue exceeds marginal cost in

neither the short run nor the long run.

The profit for this firm is

$500.

Which of the following statements is correct?

A firm operates with excess capacity when, in the long run, its level of output is below the efficient scale.

Which of the following statements is not correct?

An industry with many brand name products will be more competitive than one with many generic products.

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

Any of the above could be correct.

If this firm were operating in a perfectly competitive market, it would charge a price equal to point

G but in a monopolistically competitive market, the profit-maximizing price is C.

Which industry has the highest concentration ratio?

Industry A

Which industry has the lowest concentration ratio?

Industry K

Which of the graphs illustrates the demand curve most likely faced by a firm in a monopolistically competitive market?

Panel B

Which of the following best describes the idea of excess capacity in monopolistic competition?

The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve.

In a monopolistically competitive industry, firms set price

above marginal cost since each firm is a price setter.

What is the concentration ratio for Industry C?

approximately 48%

What is the concentration ratio for Industry B?

b. approximately 54%

At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total costs of approximately

c. $21,000.

Suppose that monopolistically competitive firms in a certain market are earning positive profits. In the transition from this initial situation to a long-run equilibrium,

each existing firm experiences a decrease in demand for its product.

Suppose YumYum has an opportunity to create a cheaper advertising campaign in newspapers rather than on television for its new product. This campaign will cost $8 million and is expected to result in the same 1.5 million one-time customers. YumYum should

invest in the cheaper campaign because they will earn a profit.

An oligopoly

is a type of imperfectly competitive market.

Senator Hubris wants to pass a law that would require all monopolistically competitive firms to operate at their efficient scale. If this law were to pass and be enforced, we would expect that monopolistically competitive firms would

lose money.

A monopolistically competitive industry is characterized by

many firms selling products that are similar but not identical.

a monopolistically competitive industry is characterized by

many firms, differentiated products, and free entry.

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

more than 133.33 units of output.

In monopolistic competition as well as in monopoly,

price exceeds marginal revenue for each firm.

A concentration ratio

reflects the level of competition in an industry.

On a vacation to China, you find yourself eating every meal at the local Burger King rather than buying a meal from one of the street vendors. Your traveling companion claims that you are irrational, since you never eat Burger King hamburgers when you are home, and Burger King's hamburgers cost more than the meals prepared and sold by China's street vendors. An economist would most likely explain your behavior by suggesting that

the Burger King brand name suggests consistent quality.

How many double scoop ice cream cones should Peter sell per day to maximize his profit?

80

At what quantity of output does average revenue exceed marginal revenue by $66.66?

at 133.33 units of output

A monopolistically competitive market is like a monopoly in that

firms in both market structures set price above marginal cost.

In a monopolistically competitive market,

firms may enter even though they will earn zero economic profit in the long run.

A profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive market because the firm in the monopolistically competitive market

faces a downward-sloping demand curve for its product.

When a firm's demand curve is tangent to its average total cost curve, the

firm's economic profit is zero.

Which of the following industries has the highest concentration ratio?

household laundry equipment

Given the cost and revenue data, Beatrice's is

not in a long-run equilibrium. More businesses will enter the bakery market in the long-run.