G
What does monopolistic competition have in common with perfect competition
A large number of firms and freedom of entry and exit
The cotton tee shirt industry is monopolistically competitive because each firm has
A very small market share
In the long run in monopolistic competition firms
Can earn zero economic profit but not an economic profit
In monopolistic competition, there are NO barriers to entry and so firms in monopolistic competition CANNOT earn an economic profit in the long run
In monopolistic competition, there are NO barriers to entry and so firms in monopolistic competition CANNOT earn an economic profit in the long run
If a monopolistically competitive sellers marginal cost is $3.56 the firm will not change its output if
It's marginal revenue is equal to 3.56
Excess capacity exists when a firm produces
Less than the quantity that minimizes average total cost
The marginal revenue facing a monopolistically competitive firm
Lies below its demand curve
One characteristic of monopolistic competition is that it has
Many firms producing a slightly differentiated product
Which of the following characterizes a firm in monopolistic competition in the
Markups of price over marginal cost and zero economic profit
A firm in monopolistic competition
Might be selling a brand name product
A firm's markup is
The difference between price and marginal cost
The food industry is characterized as monopolistic competition and the cereal industry is characterized as oligopoly
The food industry is characterized as monopolistic competition and the cereal industry is characterized as oligopoly
An example of a firm in monopolistic competition is
The many Chinese restaurants in San Francisco
Firms in monopolistic competition determining profit-maximizing by producing
Where marginal revenue equals marginal cost
A market is considered competitive if the Herfindahl Hirschman Index is LOW and its four-firm concentration ratio is LOW,
low, low
In which of the following ways do advertising and other selling costs affect a firm's cost curve
1 2 & 3
What does monopolistic competition have in common with Monopoly
A downward-sloping demand curve
If advertising increases the number of firms in an industry, each firm's demand
Decreases
In monopolistic competition the presence of a large number of firms making a differentiated product means that
Each firm can set the price of its particular product
Firms in monopolistic competition
Face a downward-sloping demand curve
If a firm in monopolistic competition is earning an economic profit
Other firms can enter the market
A firm in monopolistic competition makes its decisions on quantity and price by
Producing where MC=MR and setting the price for this quantity from the demand curve
To maintain their economic profits firms in monopolistic competition must continually engage in
Product innovation and development
Which of the following is the best example of a differentiated product
Running shoes
Monopolistic competition is judged to be economically inefficient because
The price is greater than marginal cost
In monopolistic competition, each firm supplies a small part of the market. This occurs because
There are a large number of firms
The Herfindahl Hirschman Index measures Market concentration in an industry by summing the square of the percentage market shares for
the 50 LARGEST FIRMS
