Question : 61) In monopolistic competition, there inefficiency because price greater than : 1238845

 

61) In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?

A) high concentration, as indicated by the large concentration ratio

B) product differentiation

C) freedom of entry and exit

D) marginal cost rises as more output is produced

E) the fact there are many firms in the market

 

62) Even though monopolistic competition results in inefficiency, it does have which of the following benefits for society?

A) Firms make zero economic profit in the long run.

B) Firms can make an economic profit in the short run.

C) Product variety benefits consumers.

D) Marginal cost equals price in the long run.

E) The premise of the question is incorrect because nothing in monopolistic competition justifies any economic inefficiency.

 

63) Which of the following is an advantage to society of monopolistic competition?

A) production at the lowest possible average cost

B) product variety

C) Only essential costs are incurred.

D) long-run profitability

E) The firms have excess capacity so they are always willing to increase their production.

64) A firm in monopolistic competition maximizes profit by equating

A) price and marginal revenue.

B) price and marginal cost.

C) demand and marginal cost.

D) marginal revenue and marginal cost.

E) price and average total cost.

 

65) Once a firm in monopolistic competition has determined how much to produce, the firm determines its price by referring to its

A) demand curve.

B) marginal cost curve.

C) marginal revenue curve.

D) average total cost curve.

E) average variable cost curve.

 

66) A firm in monopolistic competition definitely incurs an economic loss if

A) price equals marginal revenue.

B) price is less than average total cost.

C) marginal revenue equals marginal cost.

D) marginal revenue is less than average total cost.

E) price is greater than marginal cost.

67) In the long run, a firm in monopolistic competition

A) makes zero economic profit.

B) produces at a minimum average total cost.

C) has deficient capacity.

D) can make either a normal profit or an economic profit.

E) produces a quantity where its demand curve is upward sloping.

 

68) A firm’s efficient scale of production is the output at which its

A) marginal cost is at a minimum.

B) average total cost is at a minimum.

C) profit is maximized.

D) marginal revenue is at a maximum.

E) marginal revenue equals marginal cost.

 

69) In the long run, a firm in monopolistic competition ________ excess capacity and a firm in perfect competition ________ excess capacity.

A) has; has

B) has; does not have

C) does not have; has

D) does not have; does not have

E) might have; might have

70) In the long run, a firm in monopolistic competition ________ a markup of price over marginal cost, and a firm in perfect competition ________ a markup of price over marginal cost.

A) has; has

B) has; does not have

C) does not have; has

D) does not have; does not have

E) might have; might have

 

71) Monopolistic competition is efficient when compared to

A) perfect competition.

B) complete product uniformity.

C) the short run.

D) the long run.

E) None of the above answers is correct.

 

 

 

 

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