Question : 17.5   Integrative Questions 1) In a market in which firms operate : 1241295

 

17.5   Integrative Questions

 

1) In a market in which firms operate in monopolistic competition,

A) the HHI for a single firm exceeds 2500.

B) firms compete on price, quality and marketing.

C) in the long run, firms produce at their efficient scale.

D) in the long run, firms are not able to charge a markup.

E) advertising is nonexistent.

2) Firms in monopolistic competition

A) face a downward-sloping demand curve.

B) cannot charge a markup because there are no dominant firms.

C) definitely do not benefit from advertising.

D) produce at the efficient scale in the long run.

E) generally have low to nonexistent selling costs.

 

3) The clothing industry has many firms with differentiated products and no barriers to entry. The cereal industry has a few firms with either identical or differentiated products and moderate barriers to entry. The food industry is characterized as ________, and the cereal industry is characterized as ________.

A) perfect competition; monopolistic competition

B) monopolistic competition; oligopoly

C) oligopoly; monopolistic competition

D) perfect competition; perfect competition

E) monopolistic competition; monopoly

 

4) Advertising costs

A) make the marginal revenue more elastic.

B) shift the ATC curve upward.

C) shift the marginal cost curve rightward.

D) indirectly shift the marginal cost curve upward.

E) affect the marginal cost but not the total cost.

5) The above figure definitely shows

A) a long-run equilibrium for a monopolistically competitive firm.

B) an industry with few firms.

C) a long-run equilibrium for a perfectly competitive firm.

D) a long-run equilibrium for a perfectly competitive market.

E) a short-run equilibrium for a monopoly.

 

6) The firm in the above figure has excess capacity of ________ meals per day.

A) 0

B) between 1 and 10

C) between 11 and 20

D) more than 21 and 30

E) more than 31

7) The firm in the above figure has a markup of ________ per meal.

A) $0

B) $4

C) $8

D) $10

E) more than $10

 

8) The firm in the above figure has an economic profit of ________.

A) $0

B) $80

C) $160

D) more than $161

E) less than zero, that is, the firm has an economic loss

 

9) Which of the following characterize a firm in monopolistic competition in the long run?

i.operating at the minimum efficient scale

ii.markups of price over marginal cost

iii.zero economic profit

A) i and ii

B) i and iii

C) ii and iii

D) i, ii, and iii

E) only ii

10) Firms in which of the following industries can make an economic profit in the long run?

A) both monopolistic competition and monopoly

B) perfect competition

C) monopoly

D) monopolistic competition

E) monopolistic competition and perfect competition

 

11) If a firm has excess capacity, it

A) produces less than its efficient scale.

B) should advertise to maximize profits.

C) should decrease its markup to increase its profit.

D) is a perfectly competitive firm.

E) must face a horizontal demand curve.

 

12) If a firm in the long run produces less than its efficient scale, it

A) should raise its markup to increase its profit.

B) should lower its markup to increase its profit.

C) cannot be a perfectly competitive firm.

D) should not advertise to increase its profit.

E) must have its markup equal to zero.

 

13) A firm’s markup is

A) the difference between average total cost with and without advertising.

B) the difference between demand and marginal revenue.

C) a signal of product quality.

D) the difference between price and marginal cost.

E) the result of producing less than the efficient scale.

14) Crest Toothpaste offers new whitening toothpaste one year, a new gel swirl design the next year, and an improved cleaning formula the year after. Crest Toothpaste does this because it is

A) a monopoly trying to decrease its costs.

B) a perfectly competitive firm trying to increase its price.

C) a monopolistically competitive firm trying to maintain its economic profit.

D) driving its competitors out of business.

E) a perfectly competitive firm trying to increase its costs so it can increase its price.