Econ2023 Ch.13

When a monopolistically competitive firm is in long run equilibrium

MR = MC and P > minimum ATC

Which of the following is correct for a monopolistically competitive firm in long run equilibrium

P excessds minimum ATC

Monopolistic competition is characterized by firms

Producing differentiated products

monopolistically competitive industries are inefficient because

They are overpopulated with firms whose plants are underutilized

In the long run economic theory predicts that a monopolistically competitive firm will

have excess production capacity.

Monopolistic competition is characterized by a

Large numbers of firms and low entry barriers

The Herfindahi index for pure monopolist is

10,000

Refer to the data. If all the firms in the industry merged into a single firm, the Herfindahl index would become

100

Refer to the diagram for a monopolistically competitive firm in short run equilibrium. This firms profit maximizing price will be

16$

Refer to the diagram for a monopolistically competitive firm in short run equilibrium. The profit maximizing output for this will be

160

Refer to the data the Herfindahi index for the industry is

1800

If columns (1) and (2) of the demand data shown are this firm's demand schedule, the profit maximizing level of output will be

8 units

With he demand schedule shown by columns (2) and (3) in long run equilibrium

<price will equal average total cost.

Refer to the diagram for a monopolistic competitive firm. Long-run equilibrium price will be

A

In short run equilibrium, the monopolistically competitive firm shown will set it's price

Above ATC

In the long run, a profit maximizing monopolistically competitive firm sets it price

Above marginal cost

Refer to the diagram. In short-run equilibrium, the monopolistic competitive firm shown set it's price

Below MC

Refer to the diagram which pertain to monopolistically competitive firm long run equilibrium is shown by

Diagram a only

Refer to the diagrams. Which pertain to monopolistically competitive firm. A short run equilibrium entailing economic profits is shown by

Diagram b only

Refer to the diagram, which pertain to monopolistically competitive firm's. Short run equilibrium entailing economic loss is shown by

Diagram c only

In the long run, the price charged by monopolistically competitive firm seeking to maximize profit will

Exceed MC but equal ATC

An industry having a four-firm concentration ratio of 30 percent

Is monopolistically competitive

In the long run , the price charged by the monopolistically competitive firm attempting to maximize profits

Will be equal at ATC

A monopolistically competitive firms marginal revenue curve

a downward-sloping line that lies below the demand curve

Monopolistic competition means

a market situation where competition is based entirely on product differentiation and advertising.

Excess capacity refers to the

amount by which actual production falls short of the minimum ATC output

In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits:

may be either equal to ATC, less than ATC, or more than ATC

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

Other things equal, if more firms enter a monopolistically competitive industry

the demand curves facing existing firms would shift to the left.

If the four-firm concentration ratio for industry X is 80:

the four largest firms account for 80 percent of total sales