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Monopolistic Competition [ch. 16]

31 Questions  I  By Emy_2
Monopolistic Competition [Ch. 16]
Firm Behavior and the Organization of Industry

  
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1.  Monopolistic competition is a market structure in which few firms sell similar products
A.
B.
2.  Similar to firms in perfectly competitive markets, firms in monopolistically competitive markets can enter and exit the market without restriction so profits are driven to zero in the long run
A.
B.
3.  In the long run, firms in monopolistically competitive markets produce at the minimum of their average-total-cost curves.
A.
B.
4.  Similar to a monopolist, a monopolistically competitive firm faces a downward-sloping demand curve for its product. 
A.
B.
5.  Both monopolists and monopolistically competitive firms produce the quantity at which marginal revenue equals marginal cost and then use the demand curve facing the firm to determine the price consistent with that quantity.
A.
B.
6.  Because a monopolistically competitive firm charges a price that exceeds marginal cost, the firm fails to produce some units that the buyers value in excess of the cost of production, adn thus, monopolistic competition is inefficient.  
A.
B.
7.  In the long run, a monopolistically competitive firm charges a price that exceeds average total cost.
A.
B.
8.  Economists generally agree that monopolistically competitive firms should be regulated in order to increase economic efficiency 
A.
B.
9.  Firms that sell highly differentiated consumer products are more likely to spend a large percentage of their revenue of advertising. 
A.
B.
10.  Advertising must be socially wasteful because advertising simply adds to the cost of producing a product. 
A.
B.
11.  Critics of advertising argue that advertising decreases competition while defenders of advertising argue that advertising increases competition and reduces prices to consumers. 
A.
B.
12.  Even advertising that appears to contain little information about the product may be useful because it provides a signal about the quality of the product. 
A.
B.
13.  Brand names allow firms to make economic profits in the long run because they are able to sell inferior products based on the apparent connection of those products to the firm's unrelated high-quality products. 
A.
B.
14.  Policymakers are starting to view restrictions on advertising by professionals such as doctors, lawyers, and pharmacists as anticompetitive. 
A.
B.
15.  In the long run, a monopolistically competitive firm produces at the efficient scale while a competitive firm has excess capacity. 
A.
B.
16.  Which of the following is not a characteristic of a monopolistically competitive market? 
A.
B.
C.
D.
17.  Which of the following products is least likely to be sold in a monopolistcally competitive market?
A.
B.
C.
D.
18.  Which of the following is true regarding the similarities and differences in monopolistic competition and monopoly?
A.
B.
C.
D.
19.  In the short run, if the price is above average total cost in a monopolistically competitive market, the firm makes
A.
B.
C.
D.
20.  Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals
A.
B.
C.
D.
21.  Which of the following is true with regard to monopolistically competitive firms' scale of production and pricing decisions? Monopolistically competitive firms produce
A.
B.
C.
D.
22.  One source of inefficiency in monopolistic competition is that 
A.
B.
C.
D.
23.  The use of the word "competition" in the name of the market structure called "monopolistic competition" refers to the fact that
A.
B.
C.
D.
24.  The use of the word "monopoly" in the name of the market structure called "monopolistic competition" refers to the fact that 
A.
B.
C.
D.
25.  Which of the following firms is most likely to spend a large percentage of their revenue on advertising?
A.
B.
C.
D.
E.
26.  For the economy as a whole, what percentage of firm revenue is spend on advertising?
A.
B.
C.
D.
E.
27.  Which of following is not put forth as a criticism of advertising and brand names? 
A.
B.
C.
D.
E.
28.  Expensive television commercials that appear to provide no specific information about the product being advertised
A.
B.
C.
D.
29.  Which of the following is not an argument put forth by economists in support of the use of advertising?
A.
B.
C.
D.
30.  Defenders of the use of brand names argue that brand names
A.
B.
C.
D.
31.  Which of the following firms has the least incentive to advertise? 
A.
B.
C.
D.
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