A) The monopolist faces a downward sloping demand curve, while the monopolistic competitor faces an elastic demand curve.
B) The monopolist charges a price above marginal cost, while the monopolistic competitor charges a price equal to marginal cost.
C) The monopolist makes economic profits in the long run, while the monopolistic competitor makes zero economic profits in the long run.
D) Both the monopolist and the monopolistic competitor operate at the efficient scale.
F) A) and C)
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A) raise price and lower quantity demanded.
B) raise price without suffering a substantial loss of sales.
C) shift the market demand curve to the left.
D) decrease barriers to entry.
F) B) and C)
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A) at the efficient scale and charge a price equal to marginal cost.
B) at the efficient scale and charge a price above marginal cost.
C) with excess capacity and charge a price above marginal cost.
D) with excess capacity and charge a price equal to marginal cost.
F) C) and D)
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B) False
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A) P = AR
B) MR = MC
C) P > MC
D) All of the above are correct.
F) None of the above
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A) decrease and become more price elastic as new firms enter the market.
B) decrease and become less price elastic as new firms enter the market.
C) increase and become more price elastic as new firms enter the market.
D) increase and become less price elastic as new firms enter the market.
F) A) and B)
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Because its product ...View Answer
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A) there are barriers to entry.
B) all firms can eventually earn economic profits.
C) each of the sellers offers a somewhat different product.
D) strategic interactions between firms are important.
F) A) and D)
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A) oligopoly.
B) monopoly.
C) monopolistic competition.
D) perfect competition.
F) A) and C)
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A) Advertising manipulates people's tastes to create a desire that otherwise would not exist.
B) Advertising increases competition, which causes unnecessary bankruptcies and layoffs.
C) Advertising increases brand loyalty, causes demand to be more inelastic and, thus, increases mark-up over marginal cost.
D) Brand names cause consumers to perceive differences between goods that do not exist.
E) Brand names are only relevant to high priced products and so exclude other types of products.
G) A) and E)
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A) provides information about products, including prices and seller locations.
B) has been shown to increase competition and reduce prices compared to markets without advertising.
C) signals quality to consumers, since firms spend so much money on advertisements.
D) All of the above are correct.
F) A) and D)
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A) generating normal profits.
B) generating profits in the short run.
C) generating zero profits in the long run.
D) generating losses in the short run.
F) A) and D)
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A) price equals marginal cost.
B) marginal revenue equals marginal cost.
C) average total cost is minimised.
D) all of the above are correct.
F) All of the above
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B) False
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A) increases competition.
B) provides information to customers about prices, new products, and location of retail outlets.
C) provides a creative outlet for artists and writers.
D) provides new firms with the means to attract customers from existing firms.
F) C) and D)
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A) attract new producers into the market, which will shift the demand faced by incumbent firms to the left.
B) attract new producers into the market, which will shift the demand faced by incumbent firms to the right.
C) cause producers to exit the market, which will shift the demand faced by incumbent firms to the left.
D) cause producers to exit the market, which will shift the demand faced by incumbent firms to the right.
F) A) and B)
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A) A large number of sellers.
B) Firms are price takers.
C) Free entry into the market.
D) A differentiated product.
F) A) and C)
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A) marginal revenue and then use the demand curve to determine the price consistent with this quantity.
B) average total cost and then use the supply curve to determine the price consistent with this quantity.
C) marginal revenue and then use the supply curve to determine the price consistent with this quantity.
D) average total cost and then use the demand curve to determine the price consistent with this quantity.
F) A) and B)
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