microeconomics chapter 13

When a monopolistically competitive firm is in long-run equilibrium,

marginal revenue equals marginal cost and price equals average total cost.

Monopolistically competitive firms

may realize either profits or losses in the short run but realize normal profits in the long run.

In long-run equilibrium, a monopolistically competitive producer achieves

neither productive efficiency nor allocative efficiency.

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

product differentiation.

Excess capacity implies

productive inefficiency.

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.

Which of the following is correct for a monopolistically competitive firm in long-run equilibrium?

P exceeds minimum ATC.

In the short run, a profit-maximizing monopolistically competitive firm sets it price

above marginal cost.

Nonprice competition refers to

advertising, product promotion, and changes in the real or perceived characteristics of a product.

Monopolistically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves.

false

Monopolistic competition is characterized by excess capacity because

firms produce at an output level less than the least-cost output.

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

former sells similar, although not identical, products.

A monopolistically competitive firm's marginal revenue curve

is downsloping and lies below the demand curve.

If some firms leave a monopolistically competitive industry, the demand curves of the remaining firms will

shift to the right.

Monopolistically competitive industries are inefficient because

they are overpopulated with firms whose plants are underutilized.

In monopolistically competitive markets, resources are

underallocated because long-run equilibrium occurs where price exceeds marginal cost.