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The figure above shows a firm's demand and marginal revenue curves and its cost curves. -The firm illustrated above is A) making an economic profit of $400,000 per month. B) making an economic profit of $2,000,000 per month. C) making an economic profit of $1,600,000 per month. D) incurring an economic loss of $400,000 per month. E) incurring an economic loss of $1,600,000 per month. The figure above shows a firm's demand and marginal revenue curves and its cost curves. -The firm illustrated above is


A) making an economic profit of $400,000 per month.
B) making an economic profit of $2,000,000 per month.
C) making an economic profit of $1,600,000 per month.
D) incurring an economic loss of $400,000 per month.
E) incurring an economic loss of $1,600,000 per month.

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The clothing industry has many firms with differentiated products and no barriers to entry.The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry.The food industry is characterized as ________,and the cereal industry is characterized as ________.


A) perfect competition; monopolistic competition
B) monopolistic competition; oligopoly
C) oligopoly; monopolistic competition
D) perfect competition; perfect competition
E) monopolistic competition; monopoly

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Explain the role of advertising in monopolistic competition.Describe how advertising by all firms in a monopolistically competitive industry impacts a firm's ATC curve,its MC curve,its demand curve,and its MR curve.

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In order to maintain (or regain)economic...

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 Firm  Sales  (millions of dollars)   Firm 1 100 Firm 2 90 Firm 3 85 Firm 4 80 Other 50 firms 645\begin{array} { | l | c | } \hline { \text { Firm } } & \begin{array} { c } \text { Sales } \\\text { (millions of dollars) }\end{array} \\\hline \text { Firm 1 } & 100 \\\hline \text { Firm 2 } & 90 \\\hline \text { Firm 3 } & 85 \\\hline \text { Firm 4 } & 80 \\\hline & \\\hline \text { Other 50 firms } & 645 \\\hline\end{array} -The table above shows the revenue figures for a(n) ________ market because its four-firm concentration ratio is ________ percent.


A) competitive; 35.5
B) uncompetitive; 55
C) perfectly competitive; 15.5
D) concentrated; 55
E) perfectly competitive; 35.5

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For a firm in monopolistic competition,selling costs


A) increase costs and reduce profits.
B) always increase demand.
C) can change the quantity produced and lower the average total cost.
D) can lower total cost.
E) have no effect on the quantity sold.

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If a firm in the long run produces less than its efficient scale,it


A) should raise its markup to increase its profit.
B) should lower its markup to increase its profit.
C) cannot be a perfectly competitive firm.
D) should not advertise to increase its profit.
E) must have its markup equal to zero.

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Each of the ten firms in an industry has 10 percent of the industry's total revenue.The four-firm concentration ratio is


A) 80.
B) 100.
C) 1,000.
D) 40.
E) 10.

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-The figure above shows Firm X.The firm is a monopolistically competitive market.The firm makes an ________ in the short run but will ________ in the long run. A) economic loss of $10 per unit; go out of business or make a zero economic profit B) economic loss of $2 per unit; make an economic profit C) economic profit $10 per unit; make zero economic profit D) economic profit of $1000; definitely go out of business E) economic loss of $10 per unit; definitely face more competition -The figure above shows Firm X.The firm is a monopolistically competitive market.The firm makes an ________ in the short run but will ________ in the long run.


A) economic loss of $10 per unit; go out of business or make a zero economic profit
B) economic loss of $2 per unit; make an economic profit
C) economic profit $10 per unit; make zero economic profit
D) economic profit of $1000; definitely go out of business
E) economic loss of $10 per unit; definitely face more competition

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To maintain their economic profits,firms in monopolistic competition must continually engage in


A) product development and marketing.
B) lowering their product's price.
C) raising their product's price.
D) realizing short-run losses.
E) making the demand for their product more elastic.

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If a monopolistically competitive seller's marginal cost is $3.56,the firm will not change its output if


A) its marginal revenue is less than $3.56.
B) its marginal revenue is equal to $3.56.
C) its marginal revenue is more than $3.56.
D) its average total cost is equal to $3.56.
E) Both answers B and D are correct.

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The absence of barriers to entry in monopolistic competition means that in the long run firms


A) make an economic profit.
B) make zero economic profit.
C) incur an economic loss.
D) make either an economic profit or zero economic profit.
E) make either zero economic profit or incur an economic loss.

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In the long run,a firm in monopolistic competition ________ excess capacity and a firm in perfect competition ________ excess capacity.


A) has; has
B) has; does not have
C) does not have; has
D) does not have; does not have
E) might have; might have

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"One of the defining features of monopolistic competition is product variety." Is the previous statement correct or incorrect?

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The statement is correct.In mo...

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A firm in monopolistic competition makes its decisions on quantity and price by


A) taking price as given from the market and producing where MR = MC.
B) taking both price and quantity as given from the market.
C) producing where MR = MC and setting the price for this quantity from the demand curve.
D) taking quantity as given from the market and setting the price for this quantity from the demand curve.
E) producing where MR = MC and setting the price so that P = MR = MC.

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In monopolistic competition in the long run,firms ________.


A) make zero economic profit and require more capacity
B) incur an economic loss and require more capacity
C) make an economic profit and have excess capacity
D) make zero economic profit and have excess capacity
E) make an economic profit and require more capacity

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The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -To maximize its profit,the firm in the figure above will produce ________ jeans and set a price of ________ per pair of jeans. A) 150; between $50 and $25 B) 125; $25 C) 125; $50 D) 125; $75 E) None of the above answers is correct. The figure above illustrates a firm's demand and marginal revenue curves and its cost curves. -To maximize its profit,the firm in the figure above will produce ________ jeans and set a price of ________ per pair of jeans.


A) 150; between $50 and $25
B) 125; $25
C) 125; $50
D) 125; $75
E) None of the above answers is correct.

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Firms attempt to create a consumer perception of product differentiation through i.packaging. ii.marketing. iii.advertising.


A) i only
B) ii only
C) ii and iii
D) i and iii
E) i, ii, and iii

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List four characteristics of monopolistic competition.

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There are a large number firms; each pro...

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Crest Toothpaste offers new whitening toothpaste one year,a new gel swirl design the next year,and an improved cleaning formula the year after.Crest Toothpaste does this because it is


A) a monopoly trying to decrease its costs.
B) a perfectly competitive firm trying to increase its price.
C) a monopolistically competitive firm trying to maintain its economic profit.
D) driving its competitors out of business.
E) a perfectly competitive firm trying to increase its costs so it can increase its price.

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What does monopolistic competition have in common with monopoly?


A) a large number of firms
B) a downward-sloping demand curve
C) the ability to collude with respect to price
D) mutual interdependence
E) barriers to entry

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