question
what's markup?
answer
markup is how much price exceeds marginal cost
question
What effect does advertising have on a firm?
Advertising _______.
A.
increases marginal cost and decreases economic profit
B.
increases demand for the product and increases total revenue
C.
shifts the average fixed cost curve and the average total cost curve upward
D.
shifts the average fixed cost curve upward and the average variable cost curve downward
Advertising _______.
A.
increases marginal cost and decreases economic profit
B.
increases demand for the product and increases total revenue
C.
shifts the average fixed cost curve and the average total cost curve upward
D.
shifts the average fixed cost curve upward and the average variable cost curve downward
answer
C
question
Which of the following is a characteristic of monopolistic competition?
In monopolistic competition, ________.
A.
collusion is possible and highly likely to occur
B.
no one firm's actions directly affect the actions of the other firms
C.
one firm can dictate market conditions
D.
only a few firms compete, and each firm supplies a large part of the total industry output
In monopolistic competition, ________.
A.
collusion is possible and highly likely to occur
B.
no one firm's actions directly affect the actions of the other firms
C.
one firm can dictate market conditions
D.
only a few firms compete, and each firm supplies a large part of the total industry output
answer
B
question
Which of the following industries is an example of monopolistic competition?
A.
newspapers in your town
B.
hydroelectric distribution
C.
audio and video equipment
D.
wheat
A.
newspapers in your town
B.
hydroelectric distribution
C.
audio and video equipment
D.
wheat
answer
C
question
What is the outcome for a firm in monopolistic competition in the short run?
In the short run, a monopolistically competitive firm _______.
A.
might incur an economic loss
B.
incurs an economic loss if it fails to produce the quantity at which marginal revenue equals marginal cost
C.
either makes an economic profit or breaks even
D.
will leave the industry if it is incurring an economic loss
In the short run, a monopolistically competitive firm _______.
A.
might incur an economic loss
B.
incurs an economic loss if it fails to produce the quantity at which marginal revenue equals marginal cost
C.
either makes an economic profit or breaks even
D.
will leave the industry if it is incurring an economic loss
answer
A
question
There are five firms in a market and the market shares of the firms are 40 percent, 25 percent, 20 percent, 10 percent, and 5 percent.
What is the Herfindahl-Hirschman Index for this market?
The Herfindahl-Hirschman Index for this market is ___
What is the Herfindahl-Hirschman Index for this market?
The Herfindahl-Hirschman Index for this market is ___
answer
2750
HHI = 402 + 252 + 202 + 102 + 52
HHI = 2750
HHI = 402 + 252 + 202 + 102 + 52
HHI = 2750
question
The dry cleaning industry is in monopolistic competition.
In the short run, the profit-maximizing price is $10 per item and the average total cost is $6 per item.
In long-run equilibrium, the profit-maximizing price is $8 per item.
In long-run equilibrium, what is the economic profit of a firm in the dry cleaning industry?
In long-run equilibrium, the dry cleaning firm makes $____ economic profit.
In the short run, the profit-maximizing price is $10 per item and the average total cost is $6 per item.
In long-run equilibrium, the profit-maximizing price is $8 per item.
In long-run equilibrium, what is the economic profit of a firm in the dry cleaning industry?
In long-run equilibrium, the dry cleaning firm makes $____ economic profit.
answer
0
question
If a firm's advertising campaign is successful and its competitors respond by increasing their advertising, what happens to the firm's costs?
The firm's _______.
A.
total cost increases, but the demand for its product may become more elastic
B.
total fixed cost increases, but marginal cost does not increase as the firm increases production
C.
total cost decreases, but the demand for its product will become more inelastic
D.
total cost increases, but the firm will increase its markup
The firm's _______.
A.
total cost increases, but the demand for its product may become more elastic
B.
total fixed cost increases, but marginal cost does not increase as the firm increases production
C.
total cost decreases, but the demand for its product will become more inelastic
D.
total cost increases, but the firm will increase its markup
answer
A
question
How does a firm in monopolistic competition differ from a firm in perfect competition?
In monopolistic competition, each firm's markup _______ that in perfect competition, and the price is ______ than in perfect competition.
A.
exceeds; higher
B.
is the same as; same as
C.
is the same as; higher
D.
exceeds; same as
The total quantity produced by the firms in monopolistic competition is _______ the total quantity produced by firms in perfect competition.
A.
less than
B.
equal to
C.
greater than
In monopolistic competition, each firm's markup _______ that in perfect competition, and the price is ______ than in perfect competition.
A.
exceeds; higher
B.
is the same as; same as
C.
is the same as; higher
D.
exceeds; same as
The total quantity produced by the firms in monopolistic competition is _______ the total quantity produced by firms in perfect competition.
A.
less than
B.
equal to
C.
greater than
answer
A
A
A
question
The graph shows the cost curves, demand curve, and marginal revenue curve of a firm in monopolistic competition.
How does this firm maximize economic profit?
What is economic profit?
This firm maximizes profit by producing _______ crates a day and setting the price at _______ a crate.
A.
175; $65
B.
150; $70
C.
175; $90
D.
150; $40
Economic profit is $____ a day.
How does this firm maximize economic profit?
What is economic profit?
This firm maximizes profit by producing _______ crates a day and setting the price at _______ a crate.
A.
175; $65
B.
150; $70
C.
175; $90
D.
150; $40
Economic profit is $____ a day.
answer
B
7500
7500
question
Consider brand names and advertising. Which of the following statements is true?
A.
Suppliers of advertising face two interdependent supply curves.
B.
The advertising market produces the efficient quantity of advertising and brand names.
C.
Firms that produce advertising trade in a "two-sided market".
D.
Brand names give producers an incentive to create below-standard products after customers become loyal.
A.
Suppliers of advertising face two interdependent supply curves.
B.
The advertising market produces the efficient quantity of advertising and brand names.
C.
Firms that produce advertising trade in a "two-sided market".
D.
Brand names give producers an incentive to create below-standard products after customers become loyal.
answer
C
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