b.How does it benefit consumers?Answer: a.Productive efficiencyb.Productive efficiency means that a product is produced at the lowest possible cost. In other words,the product is produced with a minimum amount of scarce resources. Consumers benefit becausesociety can produce more products with its scarce resources.Diff: 2Page Ref: 418/418Topic: Productive EfficiencyLearning Outcome: Micro 19: Explain the concept of efficiency in the economy and obstacles to achieving itAACSB: Reflective Thinking48
ExamName___________________________________MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1) Which of the following characterizes the market that Starbucks competes in?A) There are a small number of firms.B) All coffeehouses face horizontal demand curves.C) Coffeehouses sell identical products.D) Barriers to entry are low.Answer: D1)Diff: 1Page Ref: 431/431Topic: Characteristics of Monopolistic CompetitionLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison toother market conditionsAACSB: Reflective Thinking2) Starbucks started out small in 1971, but by 1993 Starbucks was a national chain and hadcoffeehouses in 38 countries. A key to the companyʹs success was the realization by executives thatA) their stores should be located close to other stores that sold similar products.B) coffee prices would have to be cut in order for Starbucks to compete with other stores thatsold coffee.C) there was a demand for coffeehouses where consumers could sit and drink high-qualitycoffee.D) they had to keep their stores open longer hours to attract a large number of customers.2)Answer: CDiff: 1Page Ref: 431/431Topic: Characteristics of Monopolistic CompetitionLearning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison toother market conditionsAACSB:
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