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Economics - Chapter 23 > Economics 23 - > Flashcards

Economics 23 - Flashcards

1
Q

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
A

many firms producing a differentiated product

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2
Q

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
A

Product differentiation takes place in the minds of the buyers

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3
Q

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
A

occurs when a seller charges two or more prices for the same good or services

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4
Q

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
A

it will be breaking even

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5
Q

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
A

charging different prices for identical goods that have identical production costs

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6
Q

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
A

demands for their product, while making its demand less elastic

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7
Q

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

a large number of competitors

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8
Q

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
A

price = ATC

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9
Q

Which is NOT a characteristic of monopolistic competition?

  • Each firm must take into account the actions of its rival?
  • Advertising
  • Many sellers
  • Many buyers
A

Each firm must take into account the action of its rivals

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10
Q

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
A

The monopolist has a more elastic demand curve than the monopolist.

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11
Q

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
A

Both statements are true.

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12
Q

______________________ is the crucial characteristic of monopolistic competition .

  • Product differentiation
  • Price discrimination
  • Economies of scale
  • Identical products
A

Product differentiation

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13
Q

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
A

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

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14
Q

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
A

Most firms in the US are monopolistic competitors

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15
Q

Product differentiation is __________ based on real physcial differences among products.

  • always
  • sometimes
  • never
A

sometimes

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16
Q

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
A

takes place in the minds of the buyers

17
Q

The typical monopolistic competitor

  • is a large firm
  • may be a drugstore, restaurant, gas station, or dry cleaner
  • never advertises
  • has a local monopoly
A

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

18
Q

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
A

both have identical demand and marginal revenue curves

19
Q

Monopolistic competition may lead to each of the following except:

  • excess capacity
  • over-differentiation
  • peak efficiency
  • non-price competition
A

peak efficiency

20
Q

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
A

All of the choices are true

21
Q

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

a greater amount of product differentiation than people in most other countries

22
Q

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
A

Corn from an Iowa cornfield vs corn from an Illinois cornfield

23
Q

An idustry that has many firms producing a differentiated product would be classified as

  • perfectly competitive
  • a monopoly
  • a monopoolistically competitive
  • an oligopoly
A

a monopolistically competitive

24
Q

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

  • price discrimination
  • product differentiation
  • consumer surplus
  • economies of scale
A

product differentiation

25
Q

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
A

expensive blood tests in a medical lab or well-to-do medical patients

Economics - Chapter 23 (1 decks)

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