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- 44. Which of the following does a monopolistic competitive firm engage in to try and increase profits: Select one: of O a. Non-pricing competition b. Shadow markets C. Price fixing O d. Collusion 16. A consequence of a Maximum price is: Select one: of a. A new equilibrium established b. Excess supply c. Over production of goods d. Excess demandQuestion 49 (Figure: Monopolistic Competition) Based on the graph, under monopolistic competition economic profit is represented by rectangle: 2 (1) Price and Cost (5) OA feob. OB. geoc. Output ATC OC head. OD. There is no positive economic profit under monopolistic competition. Moving to another question wiFigure 16-2 This figure depicts a situation in a monopolistically competitive market. 100 90 80 70 60 50 40 30 20 10 MC MR ATC Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY Refer to Figure 16-2. Assuming the firm is maximizing profit, this firm is operating a. in the short run and earning a positive economic profit. b. in the long run and incurring and economic loss. c. in the short run and breaking even. d. in the long run and earning a positive economic profit..
- . Competitors in monopolistic competition have full control over- (A) The price of their product (B) Product quality (C) The shape of the market demand curve (D) The elasticity of product substitutions 8AM1. How might advertising make market less competitive? How might it make markets more competitive? Give the arguments for and against brand names. 2. You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? a. P < MC, P > ATC b. P > MC, P < ATC c. P = MC, P > ATC d. P > MC, P = ATCFor each of the following characteristics, saywhether it describes a perfectly competitive firm, amonopolistically competitive firm, both, or neither.a. sells a product differentiated from that of itscompetitorsb. has marginal revenue less than pricec. earns economic profit in the long rund. produces at the minimum of average total cost inthe long rune. equates marginal revenue and marginal costf. charges a price above marginal cost
- A monopolistically competitive firm in a long-run equilibrium will likely produce which of the following? A. a technically efficient amount of outputB. less than a technically efficient amount of output and less than an allocatively efficient amount of outputC. more than a technically efficient amount of output but less than an allocatively efficient amount of outputD. an allocatively efficient amount of production.E. less than a technically efficient amount of output and more than an allocatively efficientThe above figure is for a firm in monopolistic competition. The diagram represents the short run rather than the long run because 5 MC 4 АТС 1 MR 20 40 60 80 100 120 Quantity (units per day) A. the MR curve cuts the ATC curve from below. O B. the MR curve and the D curve do not coincide. OC. the firm is incurring an economic loss. OD. the firm is earning an economic profit. 3. 2. Price and costs (dollars per unit)The profit-maximizing firm illustrated in Figure operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run? Price 4 O MC ATC AVC D MR Quantity
- In a monopolistically competitive market, A strategic interactions among the firms are very important. B the threat of entry by new firms is not an important consideration. the attainment of a Nash equilibrium is an important objective. D firms may enter even though they will earn zero economic profit in the long run.0 Figure 16-5 The figure is drawn for a monopolistically competitive firm. PRICE 140 123.33 90 56.67 Refer to Figure 16-5. As the figure is drawn, the firm is in O a. a short-run equilibrium but it is not in a long-run equilibrium. Ob. a short-run equilibrium as well as a long-run equilibrium. c. neither a short-run equilibrium nor a long-run equilibrium. d. a long-run equilibrium but it is not in a short-run equilibrium. 100 133.33 QUANTITY MC ATC Demand MRFigure 16-10 The figure is drawn for a monopolistically-competitive firm. 160 140 123.33 90 QUESTION 1 56.67 Price 100 133.33 154.92 MR MC ATC Demand Refer to Figure 16-10. As the figure is drawn, the firm is in a. neither a short-run equilibrium nor a long-run equilibrium. b. a long-run equilibrium but it is not in a short-run equilibrium. c. a short-run equilibrium but it is not in a long-run equilibrium. d. a short-run equilibrium as well as a long-run equilibrium. Quantity