Module 4 - CH 13
What is the term given to all the activities necessary for a firm to sell a product to a consumer?
Marketing
In monopolistic competition there is/are
. many sellers who each face a downward−sloping demand curve.
What is a key factor that determines a firm's profitability?
All of the above.
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.
How do firms use marketing? A firm might use marketing to
Design their product
Which of the following characteristics is common to monopolistic competition and perfect competition?
Entry barriers into the industry are low.
Which of these statements is correct?
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
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.
Are monopolistically competitive firms efficient in long-run equilibrium? Monopolistically competitive firms
are not productively efficient because they do not produce at minimum average total cost and they are not allocatively efficient because they produce where price is greater than marginal cost.
One reason why the coffeehouse market is competitive is that
barriers to entry are low.
Any action the firm takes to maintain product differentiation over time is known as:
brand management
Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoe. Nike is attempting to
differentiate Air Jordan basketball shoes from other types of basketball shoes.
The monopolistically competitive firm sells a __________ product and faces a __________ demand curve.
differentiated, downward-sloping
A consumer may pay more for an identical product from a given retailer due to:
differentiation based on something other than price.
How does the long-run equilibrium for a monopolistically competitive market differ from the long-run equilibrium for a perfectly competitive market? One way in which monopolistically competitive markets and perfectly competitive markets differ is that in long-run equilibrium, monopolistically competitive firms
do not produce at minimum average total cost.
A monopolistically competitive firm will
have some control over its price because its product is differentiated.
Many firms advertise. What effect does advertising have on firm profits? One possible effect of advertising is to
increase profits by making the demand curve for the product more inelastic.
If a firm faces a downward−sloping demand curve,
it must reduce its price to sell more units.
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
Is zero economic profit inevitable in the long run for monopolistically competitive firms? In the long run, monopolistically competitive firms
may continue to earn profit by reducing costs
A monopolistically competitive firm faces a downward−sloping demand curve because
of product differentiation.
If a monopolistically competitive firm's demand curve is above its average total cost curve, then this firm is making:
positive economic profit
The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because
products are differentiated.
The key characteristics of a monopolistically competitive market structure include
sellers selling similar but differentiated products. or many small (relative to the total market) sellers acting independently.
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
Suppose a local McDonald's hamburger restaurant raises the price of its cheeseburgers from $2.00 to $2.50. What will happen to the quantity of McDonald's cheeseburgers demanded? If McDonald's raises the price of it's cheeseburgers, then
some of McDonald's customers, but not all of them, will still demand McDonald's cheeseburgers because this restaurant may be closer to them.
Do consumers benefit in any way from monopolistic competition relative to perfect competition? Compared to perfect competition, when a consumer purchases a product from a monopolistically competitive firm, the consumer benefits from purchasing a product
that is appealing because it is differentiated.
A major difference between monopolistic competition and perfect competition is
that products are not standardized in monopolistic competition unlike in perfect competition.
What factors under the control of owners and managers make a firm successful and allow it to earn economic profits? Owners and managers control some of the factors that make a firm successful such as
the firm's ability to differentiate its product.
Monopolistically competitive firms have some control over price because:
the products they produce are differentiated
Which of the following is a threat to a trademarked company name? Trademarked brands are threatened by pt 2. Which of the following is an example of a trademarked name that has become so widely used for a type of product that it is no longer associated with the product of a specific company?
their names becoming so widely used for a type of product that they no longer are associated with a specific company. pt. 2 Escalator. or . Aspirin.
Suppose a firm introduces a significantly different version of an old product. How might that firm use brand management? Such a firm might use brand management to
to postpone the time when they will no longer be able to earn economic profits.
