Chapter 13 Monopolistic Competition

Which of the following types of firms use the marginal revenue equals marginal cost approach to maximize profits?

Both perfectly competitive and monopolistically competitive

What trade-offs do consumers face when buying a product from a monopolistically competitive firm?

Consumers pay a price greater than marginal cost but also have a wider array of choices

Which of these statements is correct? -brand names can be easily protected, especially as time goes by -establishing franchises is harmful to a firm's long-term success -legally enforcing trademarks can be difficult

Legally enforcing trademarks can be difficult

Which of the following best describes the additional revenue associated with selling an additional unit of output?

Marginal revenue

What is the term given to all the activities necessary for a firm to sell a product to a consumer?

Marketing

Which type of efficiency is achieved by a monopolistically competitive firm in the long run?

Neither allocative nor productive efficiency

For what type of market structure is the demand curve the same as marginal revenue?

Perfect competition

Which of the following best describes how the product differentiation of monopolistically competitive firms may benefit consumers?

Product differentiation can locate firms more conveniently to consumers and offer versions of a product or service that better fits their needs.

Any actions the firm takes to maintain product differentiation over time is known as:

brand management

The monopolistically competitive firm sells a ___________ product and faces a ____________ demand curve.

differentiated, downward-sloping

A monopolistically competitive firm in a long run equilibrium produces where:

its demand curve is tangent to its average total cost curve

A monopolistically competitive firm is characterized by the existence of many firms in the market, differentiated products and:

low barriers to entry

A monopolistically competitive firm produces where:

marginal revenue equals marginal cost

If a monopolistically competitive firm's demand curve is above its average total cost curve, then this firm is making:

positive economic profit

A firm may opt to pay millions of dollars for celebrity endorsements in order to:

signal to consumers that the advertised product is appealing and likely to be popular

Monopolistically competitive firms have some control over price because:

the products they produce are differentiated