ECON Ch. 13
A monopolistically competitive firm has a
highly elastic demand curve
The graph depicts a monopolistically competitive firm. In the short run, this monopolistically competitive firm will set the price at
$65 and produce 35 units of output
Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be
160
Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph
A
Dequam likes product variety, while Natasha is most concerned about paying the lowest price possible for a good. This suggests that
Dequam prefers monopolistically competitive industries, while Natasha prefers purely competitive industries.
Which of the following statements is correct?
In the long run, purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits.
The monopolistically competitive firm shown in the figure
cannot operate profitably in the short run
In the long run, a representative firm in a monopolistically competitive industry will end up
earning a normal profit, but not an economic profit.
Monopolistic competition means
many firms producing differentiated product
Communist central planners didn't care about product differentiation, opting instead for a uniform design of products in order to achieve
mass production and lower costs
At long-run equilibrium in monopolistic competition, there is
neither allocative nor productive efficiency
Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because
product differentiation allows each firm some degree of monopoly power
A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from
product differentiation.
In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed?
pure competition, monopolistic competition, oligopoly, pure monopoly
Firms in an industry will not earn long-run economic profits if
there is free entry and exit of firms in the industry