economics ch 12 - Assignment Essays

question

Which of the following is a characteristic of monopolistic competition?

answer

Many firms

question

When measuring industry concentration, the concentration ratio is the proportion of total industry _____ (one word) produced by the four largest firms in an industry.

answer

sales

question

A common measure used to calculate industry concentration is

answer

the concentration ratio.

question

Concentration ratios tend to be low in _______ and high in _______.

answer

monopolistic competition; oligopolies

question

The "monopoly" dimension of monopolistic competition is that each firm

answer

has some control over price.

question

In monopolistic competition, many firms produce similar goods or services, but each maintains some independent control of its own

answer

price

question

When measuring industry concentration, the ______ is the proportion of total industry output produced for by largest firms in the industry (usually the four largest).

answer

concentration ratio

question

Suppose an industry has ten firms. Three of the firms produce 200 units of output each, one produces 150 units, two of the firms produce 75 units each, and four of the firms produce 25 units each. The four-firm concentration ratio for this industry equals ______.

answer

75 percent

question

Concentration ratios tend to be _______ in monopolistic competition and _______ in oligopolies.

answer

low; high

question

_______ refers to the ability to alter the market price of a good or service.

answer

Market power

question

Industry concentration measures the extent to which

answer

the largest firms account for industry output.

question

Firms with market power are firms with:

answer

downward-sloping demand curves

question

In monopolistically competitive industries ______.

answer

firms feel independent of one another, allowing them to determine their own price without considering the possible reactions by rival firms

question

Entry to and exit from monopolistically competitive industries is ______.

answer

relatively easy

question

Product differentiation refers to ______ that make one product different from competing products in the market.

answer

features

question

Firms with downward-sloping _____ (demand/supply) curves have some market control.

answer

demand

question

The notion that a firm must consider the reactions of its rivals before it undertakes an action is _____ monopolistic competition.

answer

absent from

question

A characteristic of monopolistic competition is the presence of _______ barriers to entry.

answer

low

question

If the four largest firms in an industry produce 20, 10, 7, and 3 units of output, respectively, and total industry output is 100, then the four-firm concentration ratio equals _____ percent.

answer

question

Which term refers to features that make one product different from competing products in the same market?

answer

Product differentiation

question

The demand curve for a monopolistically competitive firm is ______.

answer

downward sloping

question

In monopolistically competitive industries, firms feel independent of one another, allowing them to determine their own price without considering the possible reactions by rival firms. This means that their demand curve will ______.

answer

be smooth with no kinks

question

Compared with oligopoly and monopoly, entry of new firms into monopolistically competitive industries is ______.

answer

relatively easy

question

Because the products of monopolistically competitive firms are similar but not identical, the demand curve facing each firm is highly

answer

elastic

question

Monopolistically competitive firms try to create brand loyalty in order to make their demand curve more price-elastic.

answer

False

question

A high cross-price elasticity implies that a product's brand loyalty is relatively

answer

weak

question

Which of the following correctly describes the difference between products under perfect competition versus products under monopolistic competition?

answer

Standardized products are sold in perfect competition but differentiated products are sold in monopolistic competition.

question

Which of the following industry structures turns out variations of a particular product?

answer

Monopolistically competitive firms

question

If a firm is able to establish brand loyalty, its consumers are _____ likely to switch brands when price is increased.

answer

less

question

In the short run, monopolistically competitive firms maximize profits or minimize losses by producing the output level where

answer

marginal revenue equals marginal cost.

question

Brand loyalty implies high cross-price elasticity of demand.

answer

False

question

A price increase made by a monopolistically competitive firm results in the loss of _____ customers.

answer

some

question

The selection of the short-run rate of output with existing plants and equipment is known as the short-run _____ decision.

answer

production

question

Which of the following is not an example of product differentiation?

answer

Some stores may charge different prices.

question

Monopolistically competitive firms try to create brand loyalty in order to

answer

make their demand curve less price-elastic.

question

If a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firm ______.

answer

should produce less output to increase profits or reduce losses

question

Surveys suggest that brand loyalty is particularly high for (select all that apply) ______.

answer

cigarettes
toothpaste

question

The selection of the short-run rate of output with existing plants and equipment is known as the

answer

production decision.

question

Economic profit is the difference between ______.

answer

total revenues and total economic costs

question

In monopolistic competition, if profits exist, firms:

answer

enter the market

question

Brand loyalty implies:

answer

low cross-price elasticity of demand

question

If firms enter a monopolistically competitive industry, industry cost curves _____ and the demand curves facing individual firms _____.

answer

shift to the right; shift to the left

question

True or false: In the long run, there are no economic profits in monopolistic competition.

answer

True

question

_____ profit is the difference between total revenues and total economic costs.

answer

Economic

question

In monopolistic competition, if profits exist, firms will _____ (enter/exit) the market.

answer

enter

question

Productive efficiency in monopolistically competitive markets does not occur in the long run because firms set the price ______.

answer

on the demand curve where MR = MC to maximize economic profit, making output less than optimal from society's perspective

question

If firms enter a monopolistically competitive industry, industry cost curves shift to the _____ (left/right) and demand curves facing individual firms shift to the _____ (left/right).

answer

right
left

question

Managers can identify excess capacity by measuring the gap between

answer

the minimum average total cost output and the profit-maximizing output.

question

In long-run equilibrium, monopolistically competitive firms ______.

answer

will just break even and will make no economic profit

question

Which two of the following are the result of monopolistic competition?

answer

production inefficiency
allocative inefficiency

question

In long-run equilibrium, a monopolistically competitive industry isn't producing at minimum ______ cost.

answer

average

question

Imperfectly competitive firms engage primarily in _____ (price/nonprice) competition.

answer

nonprice

question

Which of the following best exemplifies a firm with excess capacity?

answer

A fast-food restaurant where customers never have to wait to place an order.

question

The most prominent form of nonprice competition is

answer

advertising

question

Competition on the basis of price is most evident in _____ industries.

answer

perfectly competitive

question

When plant and equipment are underutilized because firms are producing less than the minimum-ATC output, this is known as having ______.

answer

excess capacity
productive inefficiency

question

Advertising is the most prominent form of ________ competition.

answer

nonprice

question

In perfectly competitive industries, firms compete on the basis of

answer

price

question

Unlike monopolistic competition, perfect competition delivers both minimum average _____ (marginal/total) cost and efficient price signals.

answer

total

question

When Mary tried to get an appointment with a local dentist, she was told that the earliest the doctor could see her was in three weeks. This may have been due to a lack of ______.

answer

excess capacity

1 of 60

question

Which of the following is a characteristic of monopolistic competition?

answer

Many firms

question

When measuring industry concentration, the concentration ratio is the proportion of total industry _____ (one word) produced by the four largest firms in an industry.

answer

sales

question

A common measure used to calculate industry concentration is

answer

the concentration ratio.

question

Concentration ratios tend to be low in _______ and high in _______.

answer

monopolistic competition; oligopolies

question

The "monopoly" dimension of monopolistic competition is that each firm

answer

has some control over price.

question

In monopolistic competition, many firms produce similar goods or services, but each maintains some independent control of its own

answer

price

question

When measuring industry concentration, the ______ is the proportion of total industry output produced for by largest firms in the industry (usually the four largest).

answer

concentration ratio

question

answer

75 percent

question

Concentration ratios tend to be _______ in monopolistic competition and _______ in oligopolies.

answer

low; high

question

_______ refers to the ability to alter the market price of a good or service.

answer

Market power

question

Industry concentration measures the extent to which

answer

the largest firms account for industry output.

question

Firms with market power are firms with:

answer

downward-sloping demand curves

question

In monopolistically competitive industries ______.

answer

firms feel independent of one another, allowing them to determine their own price without considering the possible reactions by rival firms

question

Entry to and exit from monopolistically competitive industries is ______.

answer

relatively easy

question

Product differentiation refers to ______ that make one product different from competing products in the market.

answer

features

question

Firms with downward-sloping _____ (demand/supply) curves have some market control.

answer

demand

question

The notion that a firm must consider the reactions of its rivals before it undertakes an action is _____ monopolistic competition.

answer

absent from

question

A characteristic of monopolistic competition is the presence of _______ barriers to entry.

answer

low

question

If the four largest firms in an industry produce 20, 10, 7, and 3 units of output, respectively, and total industry output is 100, then the four-firm concentration ratio equals _____ percent.

answer

question

Which term refers to features that make one product different from competing products in the same market?

answer

Product differentiation

question

The demand curve for a monopolistically competitive firm is ______.

answer

downward sloping

question

answer

be smooth with no kinks

question

Compared with oligopoly and monopoly, entry of new firms into monopolistically competitive industries is ______.

answer

relatively easy

question

Because the products of monopolistically competitive firms are similar but not identical, the demand curve facing each firm is highly

answer

elastic

question

Monopolistically competitive firms try to create brand loyalty in order to make their demand curve more price-elastic.

answer

False

question

A high cross-price elasticity implies that a product's brand loyalty is relatively

answer

weak

question

Which of the following correctly describes the difference between products under perfect competition versus products under monopolistic competition?

answer

Standardized products are sold in perfect competition but differentiated products are sold in monopolistic competition.

question

Which of the following industry structures turns out variations of a particular product?

answer

Monopolistically competitive firms

question

If a firm is able to establish brand loyalty, its consumers are _____ likely to switch brands when price is increased.

answer

less

question

In the short run, monopolistically competitive firms maximize profits or minimize losses by producing the output level where

answer

marginal revenue equals marginal cost.

question

Brand loyalty implies high cross-price elasticity of demand.

answer

False

question

A price increase made by a monopolistically competitive firm results in the loss of _____ customers.

answer

some

question

The selection of the short-run rate of output with existing plants and equipment is known as the short-run _____ decision.

answer

production

question

Which of the following is not an example of product differentiation?

answer

Some stores may charge different prices.

question

Monopolistically competitive firms try to create brand loyalty in order to

answer

make their demand curve less price-elastic.

question

If a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firm ______.

answer

should produce less output to increase profits or reduce losses

question

Surveys suggest that brand loyalty is particularly high for (select all that apply) ______.

answer

cigarettes
toothpaste

question

The selection of the short-run rate of output with existing plants and equipment is known as the

answer

production decision.

question

Economic profit is the difference between ______.

answer

total revenues and total economic costs

question

In monopolistic competition, if profits exist, firms:

answer

enter the market

question

Brand loyalty implies:

answer

low cross-price elasticity of demand

question

If firms enter a monopolistically competitive industry, industry cost curves _____ and the demand curves facing individual firms _____.

answer

shift to the right; shift to the left

question

True or false: In the long run, there are no economic profits in monopolistic competition.

answer

True

question

_____ profit is the difference between total revenues and total economic costs.

answer

Economic

question

In monopolistic competition, if profits exist, firms will _____ (enter/exit) the market.

answer

enter

question

Productive efficiency in monopolistically competitive markets does not occur in the long run because firms set the price ______.

answer

on the demand curve where MR = MC to maximize economic profit, making output less than optimal from society's perspective

question

If firms enter a monopolistically competitive industry, industry cost curves shift to the _____ (left/right) and demand curves facing individual firms shift to the _____ (left/right).

answer

right
left

question

Managers can identify excess capacity by measuring the gap between

answer

the minimum average total cost output and the profit-maximizing output.

question

In long-run equilibrium, monopolistically competitive firms ______.

answer

will just break even and will make no economic profit

question

Which two of the following are the result of monopolistic competition?

answer

production inefficiency
allocative inefficiency

question

In long-run equilibrium, a monopolistically competitive industry isn't producing at minimum ______ cost.

answer

average

question

Imperfectly competitive firms engage primarily in _____ (price/nonprice) competition.

answer

nonprice

question

Which of the following best exemplifies a firm with excess capacity?

answer

A fast-food restaurant where customers never have to wait to place an order.

question

The most prominent form of nonprice competition is

answer

advertising

question

Competition on the basis of price is most evident in _____ industries.

answer

perfectly competitive

question

When plant and equipment are underutilized because firms are producing less than the minimum-ATC output, this is known as having ______.

answer

excess capacity
productive inefficiency

question

Advertising is the most prominent form of ________ competition.

answer

nonprice

question

In perfectly competitive industries, firms compete on the basis of

answer

price

question

Unlike monopolistic competition, perfect competition delivers both minimum average _____ (marginal/total) cost and efficient price signals.

answer

total

question

When Mary tried to get an appointment with a local dentist, she was told that the earliest the doctor could see her was in three weeks. This may have been due to a lack of ______.

answer

excess capacity

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