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Exam 16: Monopolistic Competition

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Question 241

Multiple Choice

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Figure 16-4 -Refer to Figure 16-4. What price will the monopolistically competitive firm charge in this market?

A) $400
B) $600
C) $700
D) $800

E) B) and C)
F) None of the above

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Question 242

Multiple Choice

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Figure 16-10 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-10. In order to maximize its profit, the firm will choose to produce

A) 100 units of output.
B) between 100 and 133.33 units of output.
C) 133.33 units of output.
D) 154.92 units of output.

E) A) and D)
F) A) and C)

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Question 243

Multiple Choice

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Scenario 16-4 Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition. -Refer to Scenario 16-4. As a result of the new restaurant, existing restauranteurs in Boston are likely to experience a

Scenario 16-3 Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) -Refer to Scenario 16-3. What is the maximum amount of profit that Peter can earn per day?

If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,

Scenario 16-3 Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter's demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter's ice cream buys a double scoop cone because it's so delicious.) -Refer to Scenario 16-3. How many double scoop ice cream cones should Peter sell per day to maximize his profit?

In monopolistically competitive markets, positive economic profits

A monopolistically competitive firm is currently earning a positive economic profit. If other firms enter the market, we would expect that the added competition will cause this firm to adjust its output such that it

A new Mexican restaurant opens in the city of Manchester. The other restaurant owners are not happy about this new restaurant because they are experiencing what externality?

The breakfast cereal industry, with its concentration ratio of 80%, would best be described as a(n)

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2. What is the concentration ratio for Industry J?

Among the following situations, which one is least likely to apply to a monopolistically competitive firm?

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Your company has recently requested that you travel to Dhaka, Bangladesh, to work on negotiations for a new factory to be located in one of the port cities. Your travel agent provides a list of several hundred local hotels and a Sheraton. In this case, the Sheraton brand-name is likely to be used as a signal of

The Mikati Philippines Hard Rock Cafe has the exact same menu as the Hard Rock Cafe in New York. This is an example of a brand name enhancing market efficiency for U.S. tourists visiting the Philippines.

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures can have positive profits in the short run?

Firms that sell highly differentiated consumer goods, such as over-the-counter drugs, soft drinks, breakfast cereals, and dog food, typically spend between 10 and 20 percent of revenue for

In monopolistically competitive markets, free entry and exit suggests that