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final_-ans-b - 1 A major difference between monopolistic...

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1. A major difference between monopolistic competition and perfect competition is the degree of product differentiation. Pure competition has none and differentiation always exists in monopolistic competition. a. True b. False ANS: A 2. A good is said to be excludable if a. those who do not pay for it can be prevented from consuming it b. those who do not produce the good can be prevented from consuming it c. it is not traded in a public market d. there is no rivalry in consuming it e. its use can be continued indefinitely ANS: A Figure 1. 3. Figure 1 shows the situation facing a natural monopoly that cannot price discriminate. What quantity will be produced if the firm is regulated to earn only normal profit? 4. Figure 1 shows the situation facing a natural monopoly that cannot price discriminate. What quantity will be produced if the firm is regulated to be efficient? 5. Jim's Shoe Shine Shop operates in a perfectly competitive market. If its marginal revenue is $5 per shine, then
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6. Figure 10-2 illustrates a monopolistically competitive firm. In order to maximize profit, or minimize loss, the firm will a. close down b. produce approximately 10 units of output and charge approximately $500 c. produce approximately 7.5 units of output and charge nearly $600 d. produce approximately 12.5 units of output and charge approximately $425 e. produce 5 units of output and charge $650 ANS: B 7. The maximum total economic profit, or minimum economic loss, for the monopolistically competitive firm in Figure 10-2 is 8. At the profit-maximizing, or loss-minimizing, output level, the firm in Figure 10-2 has total cost approximately equal to 9. Assume the firm in Figure 10-2 is currently producing 13 units of output and charging $380 each. The firm
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