Economics 23 - Flashcards
A monopolistically competitive industry has:
- many firms producing a differentiated product
- many firms producing an identical product
- a few firms producitng a differentiated product
- a few firms producing an identical product
many firms producing a differentiated product
Which statement is true?
- The monopolistic competitor always makes a profit in the short run.
- The monopolistic competitior operates at peak efficiency
- Product differentiation takes place in the minds of the buyers
- None of these statements is true
Product differentiation takes place in the minds of the buyers
Price discrimination:
- occurs whenever a good or service is resold
- is prohibited by law
- occurs when a seller charges two or more prices for the same good or service
- occurs when the seller charges different prices for different quality products
occurs when a seller charges two or more prices for the same good or services
Which statement is true about the monopolistic competitor in the long run?
- it will be making a profit
- it will be taking a loss
- it may be making a profit or taking a loss
- it will be breaking even
it will be breaking even
Price discrimination means:
- charging different prices for identical goods that have identical production costs.
- paying wages according to race or sex rather than productivity
- exploiting the working masses by charging the highest single price possible
- eliminating all cost so that only pure profits are realized
charging different prices for identical goods that have identical production costs
Through product differentiation, firms attempt to increase the :
- demands for their product, while making its demand less elastic
- supply of elasticities of competing products
- price-elasticity of demand for their products
- marginal costs of their competitors production
demands for their product, 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?
- excess capacity
- a large number of competitors
- marketing costs necessary to differentiate a product
- the ability to control the price of the product so cost can be allowed to rise
a large number of competitors
An important result in a long-run equilibrium in monopolistic competition is that the equilibrium point results in:
- price = MR
- price = ATC
- price is greater than ATC
- ATC=MC
- ATC=MR
price = ATC
Which is NOT a characteristic of monopolistic competition?
- Each firm must take into account the actions of its rival?
- Advertising
- Many sellers
- Many buyers
Each firm must take into account the action of its rivals
Which statement is true?
- The monopolistic has a more elastic demand curve than the monopolistic competitor
- The monopoistic competitor has a more elastic demaind curve than the monopolist.
- The monopolist and the monopolistic competitior have identical demand curves
- None of these statements are true
The monopolist has a more elastic demand curve than the monopolist.
Statement 1. 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.
- Statement I is true and statement II is false
- Statement II is true and statement I is false
- Both statements are true
- Both statements are false
Both statements are true.
______________________ is the crucial characteristic of monopolistic competition .
- Product differentiation
- Price discrimination
- Economies of scale
- Identical products
Product differentiation
The typical monopolistic competitor
- is a large firm
- never uses price discrimination
- always competes on the basis of producing a product that is physically different from those of its competitors
- may compete on the basis of convenience, service, and ambience
may compete on the basis of convenience, service, and ambience
Which is the most accurate statement?
- In monopolistically competitive industries there are generally to many firms
- One of the main problems with monopolistic competition is the lack of variety among goods and services
- Most firms in the US are monopolistic competitors
- The biggest problem with monopolistic competition is over - differentiation
Most firms in the US are monopolistic competitors
Product differentiation is __________ based on real physcial differences among products.
- always
- sometimes
- never
sometimes
Product differentiation
- takes place in the minds of the buyers
- takes place in the minds of the sellers
- is rare under monopolistic competition
- is based soley on deceiving the buyer
takes place in the minds of the buyers
The typical monopolistic competitor
- is a large firm
- may be a drugstore, restaurant, gas station, or dry cleaner
- never advertises
- has a local monopoly
may be a drugstore, restaurant, gas station, or dry cleaner
Monopolistic competition is similar to perfect competition for all of the following except
- both have many firms in each industry
- both have identical demand and marginal revenue curves
- both make zero economic profits in the long run
- both maximize profits at the output level where marginal revenue equals marginal cost
both have identical demand and marginal revenue curves
Monopolistic competition may lead to each of the following except:
- excess capacity
- over-differentiation
- peak efficiency
- non-price competition
peak efficiency
Which statement is 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 becuase its products are differentiated
- Monopolistic competitors have very elastic demand curves
- All of the choices are true
All of the choices are true
In general, it is fair to say that Americans are provided with
- a greater amount of product differentiation than people in most other countries
- less amount of product differentiation than people in most other countries
- about the same amount of product differentiation as people in other countries
a greater amount of product differentiation than people in most other countries
Which of the following is NOT an example of product differentation?
- A publisher that prints out-of-print books for a customer
- A local pub where the bartenders put on a juggling act with the bottles before they mix your drink
- Corn from an Iowa cornfield vs corn from an Illinois cornfield
- The Fudge Factory where the workers sing and tell jokes while they make fudge
Corn from an Iowa cornfield vs corn from an Illinois cornfield
An idustry that has many firms producing a differentiated product would be classified as
- perfectly competitive
- a monopoly
- a monopoolistically competitive
- an oligopoly
a monopolistically competitive
Providing better service, ambience, or a convenient location are all forms of
- price discrimination
- product differentiation
- consumer surplus
- economies of scale
product differentiation
Each of the following is an example of price discrimination except
- senior citizen discounts at movie theaters
- expensive blood tests in a medical lab for well to do medical patients
- higher price movie tickets on “date night”
- student rates for subscriptions to the Wall Street Journal
expensive blood tests in a medical lab or well-to-do medical patients
