Chapter 23 Flashcards
A monopolistically competitive industry has
many firms producing a differentiated product
Which statement is true?
Product differentiation takes place in the minds of the buyers.
Price discrimination
occurs when a seller charges two or more prices for the same good or service
Which statement is true about the monopolistic competitor in the long run?
It will be breaking even
Price discrimination means
charging different prices for identical goods that have identical production costs.
Through product differentiation, firms attempt to increase the
demands for their products, while making its demand less elastic
Which of the following would NOT cause the costs in a monopolistically competitive industry to be higher than those in a competitive industry?
A large number of competitors
An important result in long-run equilibrium in monopolistic competition is that the equilibrium point results in
price = ATC.
Which is NOT a characteristic of monopolistic competition?
Each firm must take into account the actions of its rivals
Which statement is true?
The monopolistic competitor has a more elastic demand curve than the monopolist
Statement I. The airlines often engage in price discrimination.
Statement II. Price discrimination occurs when a seller charges two or more prices for the same good or service.
Both are true statements
__________________ is the crucial characteristic of monopolistic competition
Product differentiation
The typical monopolistic competitor
may compete on the basis of convenience, service, and ambience
Which is the most accurate statement
Most firms in the United States are monopolistic competitors
Product differentiation is _____ based on real physical differences among products
sometimes
Product differentiation
takes place in the minds of the buyers.
The typical monopolistic competitor
may be a drugstore, restaurant, gas station, or dry cleaner
Monopolistic competition is similar to perfect competition for all of the following reasons except
both have identical demand and marginal revenue curves
Monopolistic competition may lead to each of the following except
peak efficiency
Which statement is true?
All of the choices are true.
The monopolistic competitor breaks even in the long run.
The monopolistic competitor operates at an output that is less than peak efficiency.
The monopolistic competitor has a small influence on price because its products are differentiated.
Monopolistic competitors have very elastic demand curves.
In general, it is fair to say that Americans are provided with
a greater amount of product differentiation than people in most other countries.
Which of the following is NOT an example of product differentiation?
Corn from an Iowa cornfield vs. corn from an Illinois cornfield
An industry that has many firms producing a differentiated product would be classified as
monopolistically competitive
Providing better service, ambience, or a convenient location are all forms of
product differentiation
Each of the following is an example of price discrimination except
expensive blood tests in a medical lab for well-to-do medical patients
