Econ 2302 Chapter 17 Dr Green – Flashcards
Unlock all answers in this set
Unlock answersquestion
Monopolistic competition is characterized by which of the following attributes?
answer
Free entry
Product differentiation
Many Sellers
question
Monopolistic competition differs from perfect competition because in monopolistically competitive markets
answer
each of the sellers offered a somewhat different product
question
one way in which monopolistic competition differs from oligopoly is
answer
in oligopoly markets there are only a few sellers
question
The profit-maximizing rule for a firm in a monopolistically competitive market is characterized by which of the following
answer
Average revenue exceeds marginal revenue
question
a profit-maximizing firm i na monopolistically competitive market is characterized by which of the following
answer
Average revenue exceeds marginal revenue
question
Product differentiation causes the seller of a good to face what type of demand curve?
answer
downward sloping
question
A monopolistically competitive market firm chooses
answer
the quantity of output to produce and the price at which it will sell its output
question
In a monopolistically competitive markets, economic losses
answer
signal some incumbent firms to exit the market
question
As new firms enter a monopolistically competitive market, profits of existing firms
answer
decline and product diversity in the market increases
question
When a profit-maximizing firm in a monopolistically completive market is producing the long-run equilibrium quantity
answer
its demand curve will be tangent to its average-total-cost curve.
question
Since a firm in a monopolistically competitive market faces a
answer
downward-sloping demand curve, it will always operate with excess capacity
question
When a firm operates at efficient scale
answer
its average revenue must be equal to the minimum of average
question
In the long run, a profit-maximizing firm in a monopolistically competitive firm operates at
answer
a level of output at which average total cost is falling
question
Product differentiation in a monopolistically competitive markets ensures that, for profit-maximizing firms,
answer
price will exceed marginal cost
question
Because a monopolistically competitive firm has some market power, in the long-run the price of its good exceeds its
answer
marginal cost
question
A monopolistically competitive firm's choice of output level is virtually identical to the choice made by a(n)
answer
monopolist
question
Which two curves are tangent to one another in a monopolistically competitive market with zero economic profit?
answer
demand and average total cost
question
A monopolistically competitive market
answer
has some features of monopoly and features of competition
question
When advertising is used to strengthen brand loyalty
answer
demand for the product becomes less elastic
question
Advocates for advertising argue that the efficiency of markets is enhanced when advertising
answer
provides information that is useful to consumers
question
Advertising in markets for professional services has
answer
increased in recent years and competition in these markets has been enhanced
question
Advertising that uses celebrity endorsements is most likely intended to
answer
provide a signal of product quality
question
Firms that spend a large amount of money on advertising a particular product are likely to be providing consumers with
answer
a signal of product quality
question
Defenders of advertising argue that is it not rational for profit-maximizing firms to send money on advertising for products that have
answer
inferior or mediocre quality
question
Critics of markets that are characterized by firms that sell "brand" name products argue that brand names encourage consumers to pay more for branded products that
answer
are indistinguishable from generic products
question
A recent outbreak of hepatitis was linked to a national fast-food restaurant chain. This is an example of a case in which
answer
brand name identity can be detrimental to the profitability of a firm
