Chapter 23

Question 1

A monopolistically competitive industry has

Answer 1

A. many firms producing a differentiated product.

Question 2

Which statement is true #1?
A. The monopolistic competitor alwasy makes a profit in the short run.
B. The Monopolistic competitor operates at peak efficiency
C. Product differentiation takes place in the minds of the buyers.
D. None of these statements is true.

Answer 2

C. Product differentiation takes place in the minds of the buyers.

Question 3

Price discrimination

Answer 3

C. occurs when a seller charge two or more prices for the same good or service.

Question 4

Which statement is ture about the monopolistic competitor in the long run?

Answer 4

D. It will be breaking even.

Question 5

Price discriminations means

Answer 5

A. charging different prices for identical goods that have identical production costs.

Question 6

Through product differentiation, firms attempt to increase the

Answer 6

A. demands for their products, while making its demand less elastic

Question 7

Which of the follwing would NOT cause the costs in a monopolistically competitive industry to be higher than those in a competitive industry?

Answer 7

B. A large numer of competitors

Question 8

An important result in long-run equilibrium in monopolistic competition is that the equilibrium point results in

Answer 8

B. price=ATC

Question 9

Which is NOT a characteristic of monopolistic competition?

Answer 9

A. Each firm must take into account the actions of its rivals

Question 10

Which statement is true #2?
A. The monopoilist has more elastic demand curve than the monopolistic competitor
B. The monopolistic competitor has a more elastic demand curve than the monopolist.
C. The monopolist and the monopolistic competitor have identical demand curves.
D. None of the statements are true.

Answer 10

B. The monopolistic competitor has a more elastic demand curve than the monopolist.

Question 11

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.

Answer 11

C. Both statements are true.

Question 12

__________ is the crucial characteristic of monopolistic competition.

Answer 12

A. Product differentiation

Question 13

The typical monopolistic competitor

Answer 13

D. may compete on the basis of convenience, service, and ambience.

Question 14

Which is the most accurate statement?

Answer 14

C. Most firms in the United States are monopolistic competitors.

Question 15

Product differentiation is _____ based on real physical differences amount products.

Answer 15

B. sometimes

Question 16

Product differentiation

Answer 16

A. takes place in the minds of the buyers

Question 17

The typical monopolistic competitor

Answer 17

B. may be a drugstore, restaurant, gas station, or dry cleaner.

Question 18

Monopolistic competition is similar to perfect competition for all of the following reasons except

Answer 18

B. both have identical demand and marginal revenue curves.

Question 19

Monopolistic competition may lead to each of the following except

Answer 19

C. peak efficiency

Question 20

Which statement is true #3?
A. The monopolistic competitor breadks even in the long run.
B. the monopolistick competitor operates at an output that is less than peack efficiency.
C. The monopolistic competitor has a small influence on price becuase its product are differentiated.
D. Monopolistic competitors have very elastic demand curves.
E. All of the choices are true.

Answer 20

E. All of the choices are true.

Question 21

In general, it is fair to say that Americans are prodvided with

Answer 21

A. a greater amount of product differentiation than people in most other countryies

Question 22

Which of the follwing is NOT an example of product differentiation?

Answer 22

C. Corn from an Iowa cornfield vs. corn from an Illinois cornfield.

Question 23

An industry that has many firms productin a differentiated product would be classified as

Answer 23

C. monopolistically competitive

Question 24

Providing better service, ambience, or a convenience location are all forms of

Answer 24

B. product differentiation

Question 25

Each of the following is an example of price discrimincation except

Answer 25

B. expensive blood tests in a medical lab for well-to-do medical patients.