Hw 10 Chap 13
Which of the following is a measure of the degree of industry concentration?
Herfindahl Index
In short-run equilibrium, the monopolistically competitive firm shown will set its price
below ATC.
The economic inefficiencies of monopolistic competition may be offset by the fact that
consumers have increased product variety.
Monopolistic competition is characterized by a
large number of firms and low entry barriers.
In a monopolistically competitive market like restaurants, large capital-intensive firms like McDonald's may co-exist with more labor-intensive mom-and-pop shops. In this case, higher labor costs would tend to favor the survival of
large-scale capital-intensive firms more than the small firms.
A significant difference between a monopolistically competitive firm and a purely competitive firm is that the
latter's demand curve is perfectly elastic.
Monopolistically competitive firms are similar to monopolies in that they have
marginal revenues that are less than price.
"Variety is the spice of life" is best applied to which market structure?
monopolistic competition
For which market model can we not assume a homogeneous product?
monopolistic competition
Under monopolistic competition, entry to the industry is
more difficult than under pure competition but not nearly as difficult as under pure monopoly.
The demand curve of a monopolistically competitive producer is
more elastic than that of a pure monopolist, but less elastic than that of a pure competitor.
Concentration ratios measure the
percentage of total industry sales accounted for by the largest firms in the industry.
The market situation of a monopolistic competitor is made more complex than our simple revenue-and-costs graphs would suggest, because the firm in reality juggles three decisions:
price, product, and advertising.
Demand and marginal revenue curves are downward-sloping for monopolistically competitive firms because
product differentiation allows each firm some degree of monopoly power.
In monopolistic competition, if a firm advertises and effectively raises consumer awareness of its product, it tends to
raise costs and increase demand for its product.
Which of the following is not a basic characteristic of monopolistic competition?
recognized mutual interdependence
The downward-sloping demand curve of a monopolistic competitor
reflects some level of control over its own price.
Answer the question on the basis of the following demand and cost data for a specific firm. Demand DataCost Data(1) Price(2) Price(3) QuantityTotal OutputTotal Cost$50$3522$4545303355402544703520559030156611525107714520588180 If columns 1 and 3 are this firm's demand schedule, maximum economic profit will be Multiple Choice
$90.
Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium output will be
D
Which statement concerning monopolistic competition is false?
Long-run equilibrium in monopolistic competition does not entail any economic inefficiency because of easy entry and exit.
Which of the following assumptions is part of the model of monopolistic competition?
There is no mutual interdependence among firms.
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.
Excess capacity refers to the
amount by which actual production falls short of the minimum ATC output.
Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will
attract other firms to enter the industry, causing the existing firms' profits to shrink.
Monopolistic competitive firms are productively inefficient because production occurs where
average total cost is not at its lowest.
Which set of characteristics below best describes the basic features of monopolistic competition?
easy entry, many firms, and differentiated products
Monopolistic competition is characterized by excess capacity because
firms produce at an output level less than the least-cost output.
The monopolistic competition model assumes that
firms will engage in nonprice competition.
The less elastic a monopolistic competitor's long-run demand curve, the
higher its price relative to that of a pure competitor having the same cost curves.
A monopolistically competitive firm has a
highly elastic demand curve.
Refer to the above graph for a representative firm in monopolistic competition in a constant-cost industry. This firm is
in short-run equilibrium, but not long-run equilibrium.
FirmMarket Share (%)A40B30C20D5E5 Refer to the data. If Firm B merged with Firm C, the industry's four-firm concentration ratio would ____ and its Herfindahl index would ____.
rise; rise
In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the profit-maximizing firm will
set price above marginal cost.
If some firms leave a monopolistically competitive industry, the demand curves of the remaining firms will
shift to the right.
(Consider This) The main point of the 1987 Wendy's commercial depicting a Soviet fashion show was to
show Wendy's product differentiation from its competitors.
Monopolistically competitive and purely competitive industries are similar in that
there are few, if any, barriers to entry.
Suppose that total sales in an industry in a particular year are $800 million and sales by the top four sellers are $50 million, $40 million, $30 million, and $30 million, respectively. We can conclude that
this industry is monopolistically competitive.
Which industry would be best characterized as monopolistically competitive?
web design consulting
The graph depicts a monopolistically competitive firm. This monopolistically competitive firm is earning economic profits in the short run and
will earn only normal profits in the long run.