Ch. 15 Microeconomics Quizzes

In an industry characterized by monopolistic competition, each firm has some control over the price it charges a. Nonetheless, some firms may face demand and cost curves that make it impossible to earn positive profits b. Therefore, each firm can find an output level that will yield some positive profits c. Therefore, firms will certainly earn more profit than firms in perfectly competitive industries d. Therefore, each firm can find a price that will yield some positive profit

A

In a monopolistically competitive industry, at long-run equilibrium a. The MC curve is tangent to the demand curve b. The ATC curve is tangent to the demand curve c. All of the average total cost curve is above the demand curve d. the bottom of the average total cost curve is below the demand curve e. The bottom of the average total cost curve is below the marginal revenue curve

B

All of the following are key characteristics of a monopolistically competitive industry except a. The existence of close substitutes b. A large number of firms c. A homogenous product d. A differentiated product

C

Because entry is easy and economic profits are eliminated in the long run, the result of monopolistic competition is efficient. A problem with the above statement is a. Antitrust laws often force monopolistically competitive firms to shut down b. Economic profits are not eliminated in the long run for a monopolistically competitive firm c. Monopolistically competitive firms prevent the efficient use of resources d. None of the above

C

Because entry is easy and economic profits are eliminated in the long run, the result of monopolistic competition is efficient. One problem with the above statement is a. Govt. regulation in monopolistically competitive markets hinders firms' efficiency b. Entry is not easy a monopolistically market c. Monopolistically competitive firms typically will not attain all the economies of scale available d. Monopolistically competitive firm s waste resources in differentiating their products

C

The textbook presents arguments that product differentiation and advertising a. Have been shown, by all the empirical studies, to increase market concentration b. Have been shown, by all empirical studies, to improve the functioning of the market c. Do nothing to improve the functioning of a market economy, and have many serious drawbacks d. May improve the functioning of a market economy, but have some serious drawbacks

D