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Chapter 16 1. A downward-sloping demand curve A) is a feature of all monopolistically competitive firms. B) means that the firm in question will never experience a zero profit. C) causes marginal revenue to exceed price. D) prohibits firms from earning positive economic profits in the long run. Points Earned: 0.0/1.0 Correct Answer(s): A 2. Each firm in a monopolistically competitive firm faces a downward-sloping demand curve because A) there are many other sellers in the market. B) there are very few other sellers in the market. C) the firm's product is different from those offered by other firms in the market. D) that firm faces the threat of entry into the market by new firms. Points Earned: 0.0/1.0 Correct Answer(s): C 3. For a monopolistically competitive firm, A) marginal revenue and price are the same. B) average revenue and price are the same. C) at the profit-maximizing quantity of output, price equals marginal cost. D) at the profit-maximizing quantity of output, price equals the minimum of average total cost. Points Earned: 0.0/1.0 Correct Answer(s): B 4. For a monopolistically competitive firm, at the profit-maximizing quantity of output, A) price exceeds marginal cost. B) marginal revenue exceeds marginal cost. C) marginal cost exceeds average revenue. D) price equals marginal revenue. Points Earned: 0.0/1.0 Correct Answer(s): A 5. Product differentiation causes the seller of a good to face what type of demand curve? A) downward sloping B) vertical C) horizontal D) Any of the above could be correct since product differentiation does not affect the shape of the demand curve. Points Earned: 0.0/1.0 Correct Answer(s): A 6. A firm in a monopolistically competitive market faces a A) downward-sloping demand curve because the firms product is different from those offered by other firms. B) downward-sloping demand curve because there are only a few firms in the market. C) horizontal demand curve because there are many firms in the market. D) horizontal demand curve because firms can enter the market without restriction. Points Earned: 0.0/1.0 Correct Answer(s): A 7. In the short run, a firm in a monopolistically competitive market operates much like a A) firm in a perfectly competitive market. B) firm in an oligopoly. C) monopolist. D) monopsonist. Points Earned: 0.0/1.0 Correct Answer(s): C 8. Each firm in a monopolistically competitive market A) earns both short-run and long-run profits. B) faces a downward-sloping demand curve. C) cannot earn economic profit in the short run. D) sets price equal to marginal cost. Points Earned: 0.0/1.0 Correct Answer(s): B 9. In a monopolistically competitive industry, firms set price A) equal to marginal cost since each firm is a price taker. ... View Full Document

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