Question : 41) Refer to Figure 11-14. Which of the following statements : 1244642

 

 

41) Refer to Figure 11-14. Which of the following statements describes the firm depicted in the diagram?

A) The firm is making no economic profit and will exit the industry.

B) The firm is suffering an economic loss by producing at Q0 but will break even it increases its output to Q1.

C) The firm achieves productive efficiency by producing at Q0.

D) The firm is in long-run equilibrium and is breaking even.

 

42) Refer to Figure 11-14. It is possible to lower the average cost of production by expanding output beyond Q0 to Q1. Why wouldn’t a firm expand its output to Q1?

A) The firm wants to maximize accounting profit rather than economic profit.

B) The firm would suffer an economic loss at Q1 while it would break even at Q0.

C) The firm’s marginal revenue would be negative at Q1.

D) Demand is not sufficient for consumers to buy Q1.

43) Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

A) P = ATC and MR = MC.

B) P = ATC and P = MC.

C) P > ATC and P > MR.

D) P > MR and MC = ATC.

 

44) Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

A) The firm’s demand curve will shift to the right if it stays in business in the long run.

B) The firm will exit the industry if it continues to suffer economic losses.

C) The firm will break even if its stays in business in the long run.

D) In the long run the firm will be able to charge a price that is greater than its average total cost.

 

45) If a store like hhgregg has higher costs than a comparable Best Buy store, the only way it can have higher profits is if

A) it has more locations than Best Buy.

B) its marginal revenue is lower than Best Buy’s.

C) the demand for its goods is higher than Best Buy’s.

D) it sells the quantity associated with its minimum average total cost.

 

46) A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm’s profits in the long run. But the firm can stave off competition and continue to earn economic profits if

A) it can successfully sue its competitors for copyright infringement.

B) it can move to another country where there is less competition.

C) it can lobby the government to establish a price floor for its product.

D) it can find new ways to differentiate its product.

 

47) The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm

A) expands its marketing budget.

B) adopts new technologies that enable it to lower its cost of production.

C) expands its product offerings to appeal to a wider range of consumers.

D) reduces its price to expand its market.

 

48) Despite being in a market with ________, from the mid-1990s to the mid-2000s Starbucks was able to significantly differentiate its products from the products of its competitors.

A) few barriers to entry

B) significant barriers to entry

C) blocked entry

D) no barriers to entry

 

49) If a monopolistically competitive firm breaks even, the firm is earning as much in this industry as it could in any other comparable industry.

 

50) A monopolistically competitive industry that earns economic profits in the short run will be able to expand its market share even if the market size remains constant.

 

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