Question : 21) Compared to a perfectly competitive firm, the demand curve : 1244647

21) Compared to a perfectly competitive firm, the demand curve facing a monopolistically competitive firm is

A) more elastic because there are many close substitutes for the product of a monopolistically competitive firm.

B) less elastic because monopolistically competitive firms produce similar, but not identical, products.

C) just as elastic because there are many sellers in both markets.

D) more elastic because in the long run, the demand curve is tangent to the firm’s average total cost curve.

22) Which of the following statements is true about monopolistically competitive firms?

A) Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all of their customers.

B) Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products.

C) Like perfectly competitive firms, monopolistically competitive firms maximize their profits by settling price equal to marginal cost.

D) Unlike perfectly competitive firms, monopolistically competitive firms face perfectly inelastic demand curves.

23) Which of the following is not a characteristic of a monopolistically competitive firm in long-run equilibrium?

A) Marginal revenue is equal to marginal cost.

B) Price is equal to average revenue.

C) The firm has excess capacity.

D) Price is equal to marginal cost.

24) In contrast with perfect competition, excess capacity characterizes monopolistic competition. Excess capacity is due to which of the following?

A) Monopolistically competitive firms produce at the minimum point on their average total cost curves.

B) Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves.

C) Monopolistically competitive firms produce where marginal revenue is equal to marginal cost.

D) Monopolistically competitive markets have low barriers to entry.

25) Excess capacity is a characteristic of monopolistically competitive firms. What does excess capacity mean?

A) It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves.

B) It means that firms hire more than the minimum number of workers needed to produce the profit-maximizing level of output.

C) It means that firms produce with inefficient combinations of resources.

D) It means that firms build plants that are not large enough to achieve minimum efficient scale.

26) Monopolistically competitive firms have downward-sloping demand curves. In the long run, monopolistically competitive firms earn zero economic profits. These two characteristics imply that in the long run

A) monopolistically competitive markets achieve productive efficiency.

B) monopolistically competitive markets achieve allocative efficiency.

C) monopolistically competitive firms earn economic profits.

D) monopolistically competitive firms have excess capacity.

27) Only one of the following statements is correct. The statements compare perfectly competitive (PC) markets and monopolistically competitive (MC) markets. Which statement is correct?

A) Productive efficiency is achieved in both PC and MC markets. Allocative efficiency is achieved only in MC markets.

B) Allocative efficiency is achieved in both PC and MC markets. Productive efficiency is achieved only in PC markets.

C) Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets.

D) Allocative efficiency is achieved only in PC markets. Productive efficiency is achieved only in MC markets.

28) Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive. Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?

A) In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets.

B) In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.

C) In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium.

D) In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.

29) Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive. Which of the following offers the best reason why some economists believe that monopolistically competitive markets benefit consumers despite any loss of well-being?

A) Although consumers may pay a price greater than marginal cost for a product, the product is produced at the minimum average total cost.

B) Although consumers may pay a price greater than marginal cost and the product is not produced at minimum average total cost, they benefit from being able to buy a differentiated product more closely suited to their tastes.

C) Consumers pay a price equal to the marginal cost of producing a product, even though it is not produced at the minimum average total cost.

D) Consumers are better off choosing from a variety of differentiated products, even though product differentiation causes barriers that restrict entry into monopolistically competitive markets.

30) If a significant number of smokers switch from smoking tobacco cigarettes to e-cigarettes, a company like NJOY will likely find its demand curve shifting to the ________ and its marginal revenue curve shifting to the ________ as more competitors enter the market.

A) right; right

B) right; left

C) left; right

D) left; left