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When economists compare monopoly to the monopolistic competitive market, they show

 When economists compare monopoly to the monopolistic competitive market, they show
                            that the latter generates

a.fewer choices for consumers

b.higher prices for consumers

c.higher economic profit (the sum of the economic profit of all firms)

d.less output because monopolies are more efficient

e.lower prices for consumers

82.              If some firms leave a monopolistic competitive market, the

a.remaining firms will charge a lower price to try to capture the released market share

b.remaining firms’ cost curves will shift upward and to the right

c.remaining firms’ demand curves will shift to the left

d.market demand curve shifts to the right

e.remaining firms will produce at a different point on their ATC curves

83.              A picture-frame company operates in a monopolistically competitive market. Its short-
                            run equilibrium price is $80 and its ATC is $65. It sells 100 picture frames a week.
                            Ignoring for now its long-run position, in the short run,

a.the firm makes zero economic profit, zero accounting profit, but $1,500 normal
profit

b.other picture-frame companies will leave the market because it knows new firms will
enter to drive price and economic profit down

c.the firm makes an $80,000 accounting profit

d.the firm makes an economic profit of $1,500

e.the market demand curve will shift to the left as more firms enter the market

 

 

 

 

 

 

 

84.              Tombstones are produced in a market that is monopolistic competition. One producer,

Diff:  2                            Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost                                            is $600.  Its total variable cost is $2,000. Its demand curve is downward sloping. Given                                          this information, we know that

a.new firms will enter the market

b.Rolling Stones loses $2,000 a week

c.Rolling Stones makes an economic profit of $400

d.Rolling Stones makes an accounting profit of $100

e.Rolling Stones should increase production because with a downward-sloping
demand curve, it will increase its economic profit

85.              Costume jewelry is produced in a monopolistically competitive market. One producer
                            produces 700 necklaces and at that output level, MR = MC = $3. We know then that

a.the price is $3

b.economic profit is $2,100

c.the price is higher than $3

d.new firms will enter the market

e.the firms should produce the 700 necklaces in the short run, but shut down in the
long run

86.              Perhaps it’s not a problem at all, but if "too much choice" is a problem for consumers, it
                            would occur in which market structure(s)?

a.perfect competition

b.monopoly

c.monopolistic competition

d.perfect competition and monopoly

e.not enough information

87.              In long-run monopolistic competition,

a.economic profit is zero

b.P = MC = ATC

c.P = ATC at the minimum point on the ATC

d.normal profit is zero

e.the demand curve is tangent to the MC curve

88.              Sally owns a beauty shop that generates a total revenue of $90,000 per year. She pays her
                            employees a total of $45,000; pays $10,000 for rent, insurance, and utilities; and pays
                            $15,000 for beauty supplies such as hair spray and shampoo. Sally is glad to have the
                            shop, because her next best alternative is to work as a cafeteria attendant for a salary of
                            $8,000 a year. From this we can conclude that Sally

a.would earn more working at the cafeteria

b.makes an economic profit of $20,000

c.makes an economic profit of $12,000

d.has total explicit costs of $78,000

e.has total implicit costs of $12,000

89.              Ben is a chicken farmer and is in a market that has no product differentiation. We know
                            that for Ben’s firm, its demand curve is not the market demand curve

a.although both are downward sloping

b.and its price is greater than its marginal revenue

c.and it is a price taker

d.and is not downward sloping

e.and it is a price maker

 

 

 

90.              Danny Sever owns an avocado grove and sells his avocados to wholesalers. Danny has
                            absolutely no ability to select the price. We know then that he

a.will go out of business because price will end up being lower than his costs

b.is a price-maker

c.is in a monopolistically competitive industry

d.cannot maximize profit

e.has a horizontal individual demand curve

Dec 09 2019 Read more Less More

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