Quiz #13

Which of the following is NOT a characteristic of a brand name? A brand name provides customers assurance of consistency of quality. A brand name differentiates the branded product in the minds of consumers. Firms strongly encourage other products to use its brand name. A brand name conveys information about a product.

Firms strongly encourage other products to use its brand name.

A monopolistically competitive firm will produce a quantity where: MR = MC. ATC is minimized. total revenue is maximized. MC = ATC.

MR = MC.

The monopolistically competitive firm maximizes profit by producing where: MR = MC. P = MC. MR = AR. ATC = MR.

MR = MC.

A monopolistic competitor may choose to advertise in order to: reduce excess capacity. increase demand for its product. collude more effectively with other firms. produce on the upward-sloping portion of its average total cost curve.

increase demand for its product.

The goal of a monopolistically competitive firm is to: maximize profit. minimize cost. maximize the quantity sold. create product diversity.

maximize profit.

Monopolistically competitive firms spend money on celebrity endorsements in order to: send a signal that they are successful. show that successful people are willing to offer free endorsements of their products. convey objective information about their products. illustrate the idea that advertising and brand naming create efficiencies in the market.

send a signal that they are successful.

See Quiz #13 Questions 1-2 for MC graphing practice

See Quiz #13 Questions 1-2 for MC graphing practice

What is the effect in the market as more firms enter a monopolistically competitive industry? The market supply curve shifts to the right. The market supply curve shifts to the left. The demand curve faced by each firm shifts out and to the right. The demand curve faced by each firm shifts in and to the left.

The demand curve faced by each firm shifts in and to the left.

Which statement does NOT apply to both perfect competition and monopolistic competition? The firm is a price taker. The firm does not earn long-run economic profits. The industry has a large number of small firms. There is easy entry and exit to the market.

The firm is a price taker.

Which of the following is true of perfect competition but is NOT true of monopolistic competition? The firm faces a downward-sloping demand curve. The firm faces a downward-sloping marginal revenue curve. The firm will earn zero economic profit in the long run. The firm will produce at a point where price equals marginal cost.

The firm will produce at a point where price equals marginal cost.

What accounts for the fact that profit is zero in the long-run equilibrium in monopolistic competition? Firms have excess capacity. Firms spend too much on product development. Firms are too small relative to the market. There are no barriers to the entry of new firms.

There are no barriers to the entry of new firms.

Value in diversity means that: consumers gain from a proliferation of products. innovative firms will be guaranteed a long-term profit. firms can ignore their costs in choosing the profit-maximizing point. firms will ignore profit in choosing a market strategy.

consumers gain from a proliferation of products.

The ability of a monopolistically competitive firm to have some control over price arises from the fact that: each firm sells a slightly unique product. the products sold in monopolistic competition are necessities. the products sold in monopolistic competition are identical. there are many firms in the industry.

each firm sells a slightly unique product.

The monopolistic competitor faces an: market that does not respond to advertising. perfectly elastic demand curve. elastic demand curve. perfectly inelastic demand curve.

elastic demand curve.

In the long run, a monopolistically competitive firm will earn: economic profits because of entry restrictions. normal profits because economic profits will attract new firms and there are no entry restrictions. normal profits because costs are high for monopolistically competitive firms. economic profits because of product differentiation.

normal profits because economic profits will attract new firms and there are no entry restrictions.

Advertising is LEAST likely to occur in: a monopoly. perfect competition. an oligopoly. monopolistic competition.

perfect competition.

Maria Sharapova, a woman's tennis champion, stars in Canon Sure Shot commercials with her Pomeranian dog. This is an example of advertising that: is directly informative about a product. persuades people to buy the product because it is being sold by an expert. provides an indirect signal of a product's quality. helps a consumer learn about the product's critical features.

provides an indirect signal of a product's quality.

Which of the following is a monopolistically competitive industry with differentiation by style or type? running shoes electric power cotton cucumbers

running shoes

A sporting goods store with many local competitors would practice product differentiation by all of the following EXCEPT: choosing the street corner in town that has the most traffic and is adjacent to a popular shopping mall. stocking the most advanced and high-tech shoes and training apparel. specializing in products for running enthusiasts. scheduling a series of sales promotions that change on a monthly basis

scheduling a series of sales promotions that change on a monthly basis

In the long run, the monopolistically competitive firm: will produce more than the monopolist, but at a higher price because of product differentiation. will produce less than the perfectly competitive firm, but at a lower price because it faces relatively elastic demand. will produce less than the perfectly competitive firm, but at a higher price. will produce more than the perfectly competitive firm because it offers a differentiated product, rather than a standardized one.

will produce less than the perfectly competitive firm, but at a higher price.

The long-run equilibrium in monopolistic competition is characterized by: a positive economic profit for each firm. zero economic profit for each firm. a horizontal demand curve faced by each firm. lack of control over price by the firms.

zero economic profit for each firm.