1. In long-run monopolistic competition,a) all firms will produce an identical productb) entry or exit will shift the demand curve until all firms earn zero profitc) firms might earn positive profits since strategic barriers prevent new firms from enteringd) entry or exit will shift the supply curve until all firms earn zero profite) firms may operate at a loss if the tax advantage are sufficiently large2. What is the profit maximizing output level for a monopolistic competitive firm facing demand of P=50-2q, constantmarginal costs of $10 and fixed costs are $50?a) 19 unitsb)10 unitsc) 30 unitsd) 25 unitse) 20 units3. What is the profit maximizing price for a monopolistically competitive firm facing demand of P=50-2q, constantmarginal costs of $10 and fixed costs of $50?a) $50b) $10c) $2d) $20e) $304. What is the maximum profit that can be earned by a monopolistically competitive firm facing demand of P=50-2q,constant marginal costs of $10 and fixed costs of $50?a) $150b) $100c) $500d) $200e) $3005. How much deadweight loss will be created by a monopolistically competitive firm facing demand of P-50-2q, contentmarginal costs of $10 and fixed costs of $50?a) $100b) $300c) $150d) $50e) $2006. Which of the following is NOT true regarding perfect competition and monopolistic competition?a) firms in each market structure operate in the long-run where LRAC and demand are tangentb) there are no barriers to entry or exit in either type of competitionc) all of the answers are trued) firms in each market structure operate at optimal scalee) firms in each market structure earn zero profits in the long-run7. Which characteristic of a monopolistically competitive market implies that firms will be unable to earn a profit in thelong-run?a) monopolistically competitive firms are able to earn a long-run profitb) there are no barriers to entryc) firms face a downward sloping demand curved) few sellers, many buyerse) output is differentiated8. In short-run monopolistic competition a firm maximizes its profit by selecting an output at whicha) marginal revenue exceeds marginal costb) marginal revenue equals marginal costc) total revenue equals total costd) marginal revenue equals average total coste) marginal revenue equals average variable cost9. Which of the following is NOT true of a firm operating in a monopolistically competitive market in the long-run?a) the firm produces less than optimal scaleb) the demand curve facing the firm is tangent to the marginal cost curvec) the firm sets a price above the minimum average costd) the firm operates with excess capacitye) all of the answers are true

A market structure known as monopolistic competition incorporates aspects of both monopolies and…

a) all firms will produce an identical product b) entry or exit will shift the demand curve until all firms earn zero profit c) firms might earn positive profits since strategic barriers prevent new firms from ente d) entry or exit will shift the supply curve until all firms earn zero profit e) firms may operate at a loss if the tax advantage are sufficiently large 2. What is the profit maximizing output level for a monopolistic competitive firm faci marginal costs of $10 and fixed costs are $50? a) 19 units b)10 units c) 30 units d) 25 units

a) all firms will produce an identical product b) entry or exit will shift the demand curve until all firms earn zero profit c) firms might earn positive profits since strategic barriers prevent new firms from ente d) entry or exit will shift the supply curve until all firms earn zero profit e) firms may operate at a loss if the tax advantage are sufficiently large 2. What is the profit maximizing output level for a monopolistic competitive firm faci marginal costs of $10 and fixed costs are $50? a) 19 units b)10 units c) 30 units d) 25 units

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.2P

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