Question :
21) The figure above shows Firm X. The firm a : 1238841
21) 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
22) The major difference between monopolistic competition and monopoly is
A) monopoly is a price setter, and a firm in monopolistic competition is a price taker.
B) only a monopoly can make an economic profit in the long run.
C) only a firm in monopolistic competition can make an economic profit in the short run.
D) how the quantity of output is determined.
E) only firms in monopolistic competition are protected by barriers to entry.
23) In the long run in monopolistic competition, firms
A) can make an economic profit.
B) incur an economic loss.
C) make zero economic profit.
D) shut down if they are making zero economic profit.
E) make either an economic profit or zero economic profit.
24) If firms in monopolistic competition are making economic profits, eventually
A) they shut down.
B) they exit the industry.
C) the market turns into a monopoly.
D) new firms enter the industry.
E) the firms in the market increase their production so that their economic profit disappears.
25) If a firm in monopolistic competition is making an economic profit,
A) it is in the long run.
B) other firms can enter the market.
C) it can do so because it is “monopolistic” and other firms will have a hard time competing with it.
D) its average cost must exceed its marginal cost.
E) The question errs because firms in monopolistic competition cannot make an economic profit.
26) In the long run, firms in monopolistic competition make zero economic profit because
A) firms are free to enter and exit.
B) their products are similar but slightly different.
C) of over-reliance on product marketing.
D) of collusion among the various sellers.
E) their demand curves are horizontal.
27) In long-run equilibrium, a firm in monopolistic competition makes
A) an economic profit but the economic profit is less than it would be if the firm was a monopoly.
B) an economic profit that is higher than what it would be if the firm was a monopoly.
C) zero economic profit.
D) an economic profit that is the same amount as it would be if the firm was a monopoly.
E) an economic profit, an economic loss, or zero economic profit.
28) In monopolistic competition there are ________ barriers to entry, so therefore in the long run, economic profit ________.
A) no; is substantial
B) no; equals zero
C) many; equals zero
D) many; is substantial
E) many; might be earned depending on the degree of product differentiation
29) In monopolistic competition, there are ________ barriers to entry and so firms in monopolistic competition ________ make an economic profit in the long run.
A) high; can
B) high; cannot
C) no; can
D) no; cannot
E) sometimes; can sometimes
30) Entry and exit continue in monopolistic competition until the remaining firms are
A) making an economic profit.
B) incurring an economic loss.
C) making less than a normal profit.
D) making zero economic profit.
E) producing the normal amount of product differentiation.
