Microeconomics Chapter 13 Assignment

"Monopolistic competition is monopolistic up to the point at which consumers become willing to buy close-substitute products and competitive beyond that point." This statement recognizes that products of monopolistically competitive firms

"Competition in quality and service may be just as effective as price competition in giving buyers more for their money." This statement is true

Monopolistically competitive firms frequently prefer nonprice competition to price competition because

There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry's Herfindahl index is:

In the small town of Geneva, there are 5 firms that make watches. The firms' respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The four-firm concentration ratio for the town's watch-making industry is:

Which of the following best describes the efficiency of monopolistically competitive firms?

Suppose that the most popular car dealer in your area sells 10 percent of all vehicles.
a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area?
b. In that same situation, what would the four-firm concentration ratio be?

Suppose that a monopolistically competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, ATC per meal is $10 and consumers are willing to pay $12 per meal.

a. What is the size of this firm's profit or loss?
b. Will there be entry or exit?
Will this restaurant's demand curve shift left or right?
c. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. What is the size of the firm's economic profit?
d. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. Is the deadweight loss for this firm greater than or less than $60?

The difference between monopolistic competition and pure competition is that in comparison to pure competition, monopolistic competition has

The difference between monopolistic competition and pure monopoly is that in comparison to monopolistic competition, pure monopoly has

Product differentiation

Firms will enter a monopolistically competitive industry when there are

Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 23%, 22%, 18%, 12%, 11%, 8%, and 6%.

a. What is the four-firm concentration ratio of the hamburger industry in this town?
b. What is the Herfindahl index for the hamburger industry in this town?
c. If the top three sellers combined to form a single firm, what would happen to the four-firm concentration ratio and to the Herfindahl index?

Consider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm, and then answer the following questions.
Suppose the firm produces where there is allocative effciency.

a. The resulting price and quantity combination is illustrated in graph above by point
b. At this resulting price and quantity combination, the firm would experience