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In a monopolistically competitive market there are
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many firms producing similar but not identical products
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Which of the following is NOT a characteristic of monopolistic competition?
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Barriers to entry
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Which of the following is NOT a characteristic of monopolistic competition?
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Marginal cost pricing in the long run
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Which of the following products would most likely be produced in a monopolistically competitive market?
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Pizza
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Which of the following is most likely to be a monopolistically competitive firm?
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a fast food restaurant
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Monopolistic competition and perfect competition are different in that
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only monopolistically competitive firms advertise
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Advertising is used by firms in a monopolistic competitive industry to
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all of the above
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In a monopolistically competitive market, a firm should advertise to the point at which
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the additional reveunue generated by one more dollar of advertising just equals the extra dollar cost of advertising
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Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is
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MORE elastic
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The demand curve for the product of a monopolistically competitive firm slopes downward because
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products are perceived by consumed as different
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In the short run, a monopolistically competitive firm
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can earn postivie, negative, or zero economic profits
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If firms in a monopolistically competitive industry experience short-run losses,
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some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit
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The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?
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In the long run, other firms will successfully offer SUBSTITUTES for the profitable firm's product, and competition will eliminate economic profits
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A monopolistic competitor is in long-run equilibrium when
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economic profits are equal to zero and the average total cost curve is TANGENT to the demand curve
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In the long run, monopolistic competitive firms are considered to be operating inefficiently because their
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average total costs are not at a minimum
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In the above figure, what would happen to the monopolistically competitive industry in the long run?
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More producers would enter the market, and the share of the market to this firm would fall,
which would cause the demand curve to shift leftward until there is zero economic profit.
which would cause the demand curve to shift leftward until there is zero economic profit.
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In the long run in monopolistically competitive market, a firm will, in theory
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break even
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A good that entails relatively high fixed costs and low marginal costs related to the use of knowledge and other information-intensive inputs as key factors of production is
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an information product
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If the producer of an information product engages in marginal cost pricing, it earns
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an economic loss
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The above table depicts prices, quantities, and marginal costs faced by the campus bookstore. At the profit-maximizing level of output, what is the profit earned by the store?
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$6
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In the above figure, the profit-maximizing monopolistically competitive firm will
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make a profit of $30,000
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Products such as office supplies are examples of
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SEARCH goods
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If a customer buys an airline ticket based only on the price of the ticket, then the airline ticket is a(n)
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SEARCH good
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A good that people must actually consume bfore they can determine qualities is called
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an experience good
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Jim has just researched and purchased a computer through the Internet as a result of responding directly to a pop-up ad. The pop-up ad is an example of
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Interactive marketing
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If a firm produces an experience good, its mode of advertising will be
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PERSUASIVE advertising
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Persuasive advertising is the type of advertising that
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is used to induce a consumer to discover previously unknown tastes and preferences
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A product with qualities that consumers lack the expertise to asses WITHOUT assistance is called a(n)
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INFERIOR good
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Informational advertising is the type of advertising that
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emphasizes the features of a product
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The goal of advertising is to
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reduce the price elasticity of demand for the firm's product
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