Microeconomics, Chp. 25 - Assignment Essays

question

The four characteristics of monopolistic competition are

answer

Significant number of sellers, differentiated product, advertising, easy entry

question

Each monopolistic competitor has ____ control over its price, but collusion is difficult and each firm acts independently of the others.

answer

little

question

Perhaps the most important feature of a monopolistically competitive industry is product _______.

answer

differentiation

question

Differentiation refers to _____.

answer

differences in physical characteristics.

question

Each separate differentiated product has close ______.

answer

substitutes

question

Because product differentiation is such an important aspect of monopolistically competitive industries, firms in these industries promote _____ names via advertising.

answer

brand

question

Firms can register ______- words, symbols, and logos--with the U.S. Patent and Trademark Office, and they can seek legal damages if anyone makes false use of trademarks
and thereby damages the image of the firm's brand names.

answer

trademarks

question

Trademark

answer

a symbol, word, or words legally registered or established by use as representing a company or product.

question

______ goods, which are items with qualities that can be assessed in advance of their purchase, are best marketed via informational advertising that acquaints consumers with
their features.

answer

question

______ goods, which are items with qualities that can only be assessed
following their purchase, are best marketed via persuasive advertising that induces consumers to discover previously unknown tastes for those items.

answer

Experience

question

______ goods are items with qualities that consumers lack the expertise to assess without assistance

answer

Credence

question

_______ products are goods produced using information-intensive inputs at a relatively high fixed cost but distributed for sale at a relatively low marginal cost.

answer

Information

question

Because fixed costs are relatively high, the average fixed cost of producing the first copy of an information product is ______. Average fixed cost ______ as the firm increases its sale
of additional units.

answer

significant; declines

question

The per-unit cost of distributing additional copies of an information product is the same, relatively low amount no matter how many units are sold. Thus, marginal cost and average
variable cost are _____ to the same constant per-unit cost.

answer

equal

question

For a firm that makes and sells an information product, the average total cost curve for the firm that produces an information product slopes _____. Hence, the firm experiences short-run economies of operation.

answer

downward

question

If the price of an information product were equal to marginal cost, and hence average variable cost, the firm would only earn sufficient revenues to cover its ______ costs but not
its fixed costs.

answer

variable

question

Under monopolistic competition, collusion is (easy/difficult). Each firm (must/need not) take into account the reactions of rivals, and each firm has (a little/much/no) control over its selling
price.

answer

Difficult; need not; a little

question

Collusion

answer

secret agreement or cooperation

question

The demand curve for the monopolistic competitor is _____
sloped.
Consequently, the monopolistic competitor's marginal revenue curve is (below/above) its demand, or AR curve.

answer

Negatively; belie

question

In the short run, a profit-maximizing monopolistically competitive firm produces to the point at which (price/marginal revenue) equals (marginal cost/average total cost).

answer

Marginal revenue; marginal cost

question

In a long-run monopolistically competitive equilibrium, the price of a firm's product must be
(less than/greater than/equal to) marginal cost. Thus, social (inefficiency/efficiency) exists in the monopolistic competition market structure.

answer

greater than; inefficiency

question

In a long-run monopolistically competitive equilibrium, the price of a firm's product is (less than/equal to/greater than) the average total cost of producing its actual output level, but
the price is (less then/equal to/greater than) the minimum feasible average total cost of producing the product.

answer

Equal to; greater than

question

Brand names and trademarks have value for firms in monopolistically competitive industries because these are important factors affecting the (demand for/supply of) products that are (homogeneous/differentiated) among the firms in this industry.

answer

Demand for; differentiated

question

The main methods of advertising are ____ marketing, _____ marketing, and ____ marketing.

answer

Direct; mass; interactive

question

The four characteristics of monopolistic competition are

answer

Significant number of sellers, differentiated product, advertising, easy entry

question

answer

Difficult; need not; a little

question

Collusion

answer

secret agreement or cooperation

question

The demand curve for the monopolistic competitor is _____
sloped.
Consequently, the monopolistic competitor's marginal revenue curve is (below/above) its demand, or AR curve.

answer

Negatively; belie

question

In the short run, a profit-maximizing monopolistically competitive firm produces to the point at which (price/marginal revenue) equals (marginal cost/average total cost).

answer

Marginal revenue; marginal cost

question

answer

greater than; inefficiency

question

answer

Equal to; greater than

question

answer

Demand for; differentiated

question

The main methods of advertising are ____ marketing, _____ marketing, and ____ marketing.

answer

Direct; mass; interactive

question

Variable; total

answer

question

An item with qualities that are relatively difficult for consumers to evaluate in advance of purchasing the item is an ______ good.

answer

experience

question

An item with qualities that consumers lack the expertise to assess without assistance is a _____ good.

answer

Credence

question

Advertising that focuses on explaining the features of a product is ___ advertising that is more likely to be used by a firm seeking to market (a search/an experience) good.

answer

informational; a search

question

Advertising that is intended to induce a consumer to discover previously unknown tastes for an item is _____ advertising that is more likely to be used by a firm seeking to market
(a search/an experience) good.

answer

Persuasive; an experience

question

For the producer of an information product, in the short run a relatively low average _____ cost of producing the item is equal to marginal cost at any given amount of output, and the average _____ cost curve slopes downward over its entire range.

answer

Variable; tot

question

If the producer of an information product were required to set the price of the item equal to marginal cost, then price would equal average (fixed, variable) cost at any given amount of
Output, so that total revenues would exactly equal (total fixed, total variable) costs; this means
that the firm would not earn sufficient total revenues to cover any of its (total fixed, total variable) costs, so it would earn (zero, negative) economic profits.

answer

variable; total variable; total fixed; negative

question

If the producer of an information product sets the price of the item equal to average total cost, then total revenues would exactly equal
_____ costs, and the firm would
earn zero economic profits.

answer

total; zero

question

T/F: The monopolistic competitor has a negatively sloped demand curve.

answer

Tuee

question

T/F: The monopolistic competitor must take into account the reactions of its competitors.

answer

False

question

T/F: The most important feature of the monopolistically competitive market is product differentiation.

answer

True

question

T/F: Product differentiation exists in the wheat industry.

answer

False

question

T/F: One important goal of advertising is to convey quality information.

answer

True

question

T/F: The monopolistic competition model leads to social efficiency because in the long run P= MC.

answer

False

question

T/F: A firm that produces a search good is likely to market the item using exclusively persuasive advertising.

answer

False

question

T/F: Based on the advertising expenses of U.S. firms, the most used advertising method is direct marketing.

answer

True

question

T/F: Informational advertising focuses on enlightening consumers about the features of a product.

answer

True

question

T/F: A problem with heavy spending on advertising is that it can signal that a firm is mismanaged and consequently may be exiting the market in the near future.

answer

False

question

T/F: The production of information products entails ineurring relatively low fixed costs and relatively high marginal costs.

answer

False

question

T/F: The reason why a firm that sells an information product experiences short-run economies of operation is that the average total cost curves slopes downward over its
entire range.

answer

True

question

T/F: If the price of an information product is equal to marginal cost, then the firm producing this item fails to earn sufficient revenues to cover fixed costs.

answer

True

question

T/F: The price of an information product exceeds average total cost in a long-run monopolistically competitive equilibrium.

answer

False

question

Which one is NOT a characteristic of monopolistic competition?
a. Each firm must take into account its rivals' reactions to price changes.
b. There are a significant number of sellers.
c. There are differentiated products.
d. Advertising is prevalent.

answer

Each firm must take into account its rivals' reactions to price changes.

question

Which one of the following is an important characteristic of monopolistic competition?
a. It is difficult to enter the industry.
b. It is easy for firms to establish collusive agreements.
c. Each firm has very small shares of total market production and sales.
d. Firms are all interdependent, so decisions made by each firm affect choices of others.

answer

Each firm has very small shares of total market production and sales.

question

Because each separate differentiated product sold by a monopolistically competitive firm has numerous similar substitutes, we can say for certain that the demand for each individual firm's
product is relatively

a. low, so that no one firm can sell more than a few units of its output.
b. high, so that in principle any given firm can sell the most output in the market.
c. elastic, as compared with the demand for the product of a monopoly producer.
d. inelastic, as compared with the demand for the product of a monopoly producer.

answer

elastic, as compared with the demand for the product of a monopoly producer.

question

As is also true in a perfectly competitive industry, in a monopolistically competitive industry, in the long run firms can easily _____ the market in response to positive economic profits.

answer

enter

question

As is also true of a monopoly, in a monopolistically competitive industry, in the short run each firm's marginal revenue ______ as it increases its production and sales.

answer

declines

question

For the monopolistic competitor, in the long run, the demand curve must be ____ to the AT curve.

answer

tangent

question

The U.S. Patent and Trademark Office ______, which gives an owner the right to seek legal relief in the event it can
prove misuse of the brand name by another party.

answer

registers trademarks

question

Advertising
a. attempts to increase the demand for a firm's product.
b. can provide more information to buyers.
c. helps to differentiate a firm's product.
d. All of the above

answer

All of the above

question

Persuasive advertising is intended to acquaint consumers with a taste or preference previously _____ to them.

answer

unknown

question

Experience goods must be ______ for buyers to evaluate their qualities.

answer

consumed

question

In the United States, firms spend the majority of their advertising dollars on ____ marketing

answer

Direct

question

For a firm that sells an information product, which one of the following pairs of cost curves both slope downward in the short run?

answer

average fixed cost and average total cost

question

For a firm that sells an information product, which of the following costs are identical, constant, and relatively small over all ranges of output in the short run?

answer

marginal cost and average variable cost

question

The term short-run economies of operation refers to _____ average total cost as more units of an information product are sold.

answer

decreasing

question

If the producer of an information product faces a strictly enforced legal requirement that any units of output it produces and sells must be offered at a price equal to marginal cost, then the firm's desired output will be ____ units.

answer

zero

question

In a long-run equilibrium for a profit-maximizing, monopolistically competitive producer of an information product, the firm will earn ____ economic profits.

answer

Zero

question

If a firm that manufactures and sells an information product sets the price of the product equal to marginal cost, it will earn an economic loss equal to its fixed costs.

answer

...

question

In the short run, a monopolistically competitive firm that manufactures and sells an information product maximizes its economic profits by producing to the point at which marginal revenue equals _____.

answer

marginal cost

question

monopolistic competition ==

answer

Product differentiation

question

search good == _____ advertising

answer

informational

question

Information product == short-run economies of operation

answer

...

question

TV and radio advertisements == ____ marketing

answer

Mass

question

mail advertisements == _____ marketing

answer

Direct

question

Experience good == _____ advertising

answer

Persuasive

1 of 79

question

The four characteristics of monopolistic competition are

answer

Significant number of sellers, differentiated product, advertising, easy entry

question

Each monopolistic competitor has ____ control over its price, but collusion is difficult and each firm acts independently of the others.

answer

little

question

Perhaps the most important feature of a monopolistically competitive industry is product _______.

answer

differentiation

question

Differentiation refers to _____.

answer

differences in physical characteristics.

question

Each separate differentiated product has close ______.

answer

substitutes

question

Because product differentiation is such an important aspect of monopolistically competitive industries, firms in these industries promote _____ names via advertising.

answer

brand

question

answer

trademarks

question

Trademark

answer

a symbol, word, or words legally registered or established by use as representing a company or product.

question

______ goods, which are items with qualities that can be assessed in advance of their purchase, are best marketed via informational advertising that acquaints consumers with
their features.

answer

question

answer

Experience

question

______ goods are items with qualities that consumers lack the expertise to assess without assistance

answer

Credence

question

_______ products are goods produced using information-intensive inputs at a relatively high fixed cost but distributed for sale at a relatively low marginal cost.

answer

Information

question

answer

significant; declines

question

answer

equal

question

answer

downward

question

If the price of an information product were equal to marginal cost, and hence average variable cost, the firm would only earn sufficient revenues to cover its ______ costs but not
its fixed costs.

answer

variable

question

answer

Difficult; need not; a little

question

Collusion

answer

secret agreement or cooperation

question

The demand curve for the monopolistic competitor is _____
sloped.
Consequently, the monopolistic competitor's marginal revenue curve is (below/above) its demand, or AR curve.

answer

Negatively; belie

question

In the short run, a profit-maximizing monopolistically competitive firm produces to the point at which (price/marginal revenue) equals (marginal cost/average total cost).

answer

Marginal revenue; marginal cost

question

answer

greater than; inefficiency

question

answer

Equal to; greater than

question

answer

Demand for; differentiated

question

The main methods of advertising are ____ marketing, _____ marketing, and ____ marketing.

answer

Direct; mass; interactive

question

The four characteristics of monopolistic competition are

answer

Significant number of sellers, differentiated product, advertising, easy entry

question

answer

Difficult; need not; a little

question

Collusion

answer

secret agreement or cooperation

question

The demand curve for the monopolistic competitor is _____
sloped.
Consequently, the monopolistic competitor's marginal revenue curve is (below/above) its demand, or AR curve.

answer

Negatively; belie

question

In the short run, a profit-maximizing monopolistically competitive firm produces to the point at which (price/marginal revenue) equals (marginal cost/average total cost).

answer

Marginal revenue; marginal cost

question

answer

greater than; inefficiency

question

answer

Equal to; greater than

question

answer

Demand for; differentiated

question

The main methods of advertising are ____ marketing, _____ marketing, and ____ marketing.

answer

Direct; mass; interactive

question

Variable; total

answer

question

An item with qualities that are relatively difficult for consumers to evaluate in advance of purchasing the item is an ______ good.

answer

experience

question

An item with qualities that consumers lack the expertise to assess without assistance is a _____ good.

answer

Credence

question

Advertising that focuses on explaining the features of a product is ___ advertising that is more likely to be used by a firm seeking to market (a search/an experience) good.

answer

informational; a search

question

answer

Persuasive; an experience

question

answer

Variable; tot

question

answer

variable; total variable; total fixed; negative

question

If the producer of an information product sets the price of the item equal to average total cost, then total revenues would exactly equal
_____ costs, and the firm would
earn zero economic profits.

answer

total; zero

question

T/F: The monopolistic competitor has a negatively sloped demand curve.

answer

Tuee

question

T/F: The monopolistic competitor must take into account the reactions of its competitors.

answer

False

question

T/F: The most important feature of the monopolistically competitive market is product differentiation.

answer

True

question

T/F: Product differentiation exists in the wheat industry.

answer

False

question

T/F: One important goal of advertising is to convey quality information.

answer

True

question

T/F: The monopolistic competition model leads to social efficiency because in the long run P= MC.

answer

False

question

T/F: A firm that produces a search good is likely to market the item using exclusively persuasive advertising.

answer

False

question

T/F: Based on the advertising expenses of U.S. firms, the most used advertising method is direct marketing.

answer

True

question

T/F: Informational advertising focuses on enlightening consumers about the features of a product.

answer

True

question

T/F: A problem with heavy spending on advertising is that it can signal that a firm is mismanaged and consequently may be exiting the market in the near future.

answer

False

question

T/F: The production of information products entails ineurring relatively low fixed costs and relatively high marginal costs.

answer

False

question

T/F: The reason why a firm that sells an information product experiences short-run economies of operation is that the average total cost curves slopes downward over its
entire range.

answer

True

question

T/F: If the price of an information product is equal to marginal cost, then the firm producing this item fails to earn sufficient revenues to cover fixed costs.

answer

True

question

T/F: The price of an information product exceeds average total cost in a long-run monopolistically competitive equilibrium.

answer

False

question

answer

Each firm must take into account its rivals' reactions to price changes.

question

answer

Each firm has very small shares of total market production and sales.

question

answer

elastic, as compared with the demand for the product of a monopoly producer.

question

As is also true in a perfectly competitive industry, in a monopolistically competitive industry, in the long run firms can easily _____ the market in response to positive economic profits.

answer

enter

question

As is also true of a monopoly, in a monopolistically competitive industry, in the short run each firm's marginal revenue ______ as it increases its production and sales.

answer

declines

question

For the monopolistic competitor, in the long run, the demand curve must be ____ to the AT curve.

answer

tangent

question

The U.S. Patent and Trademark Office ______, which gives an owner the right to seek legal relief in the event it can
prove misuse of the brand name by another party.

answer

registers trademarks

question

Advertising
a. attempts to increase the demand for a firm's product.
b. can provide more information to buyers.
c. helps to differentiate a firm's product.
d. All of the above

answer

All of the above

question

Persuasive advertising is intended to acquaint consumers with a taste or preference previously _____ to them.

answer

unknown

question

Experience goods must be ______ for buyers to evaluate their qualities.

answer

consumed

question

In the United States, firms spend the majority of their advertising dollars on ____ marketing

answer

Direct

question

For a firm that sells an information product, which one of the following pairs of cost curves both slope downward in the short run?

answer

average fixed cost and average total cost

question

For a firm that sells an information product, which of the following costs are identical, constant, and relatively small over all ranges of output in the short run?

answer

marginal cost and average variable cost

question

The term short-run economies of operation refers to _____ average total cost as more units of an information product are sold.

answer

decreasing

question

answer

zero

question

In a long-run equilibrium for a profit-maximizing, monopolistically competitive producer of an information product, the firm will earn ____ economic profits.

answer

Zero

question

If a firm that manufactures and sells an information product sets the price of the product equal to marginal cost, it will earn an economic loss equal to its fixed costs.

answer

...

question

answer

marginal cost

question

monopolistic competition ==

answer

Product differentiation

question

search good == _____ advertising

answer

informational

question

Information product == short-run economies of operation

answer

...

question

TV and radio advertisements == ____ marketing

answer

Mass

question

mail advertisements == _____ marketing

answer

Direct

question

Experience good == _____ advertising

answer

Persuasive

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