NAME

Question types


Start with


Question limit

of 50 available terms

Print test

50 True/False questions

  1. But like all monopolistically competitive firms, Starbucks will have to continue to innovate, orMC=MR

          

  2. 3 features of a monopolistic competitive marketmany firms, firms sell identical products, and no barriers to entry to new firms entering the industry

          

  3. One possible effect of advertising on firms' profits is todecrease profits by increasing the cost of production

          

  4. However firms need not passively accept this long-run outcome. They could:so not productively efficient

          

  5. The lack of efficiency suggests that monopolistic competition is a bad situation for consumers, butconsumers might benefit from the product differentiation

          

  6. If McDonald's raises the price of its cheeseburgers, thenrevenue increases because of the additional sale

          

  7. Price effectequal to the height of the demand curve

          

  8. Output effect of the price reductionin order to sell the additional product, it must reduce the price on all product it will sell. The loss in revenue on the products it would have sold anyway is the

          

  9. No barriers to enter the industry impliesin order to sell the additional product, it must reduce the price on all product it will sell. The loss in revenue on the products it would have sold anyway is the

          

  10. Many consumers are willing to accept a higher price for a differentiated product, somonopolistic competition is not necessarily bad for consumers

          

  11. Output effectthe vertical difference between demand and marginal revenue curves

          

  12. Monopolistic competitionequal to the height of the demand curve

          

  13. Advertising-a critical element of marketing for monopolistically competitive firms
    -firms can increase demand for their products.
    -using it to differentiate their products: effectively making the demand curve more inelastic

          

  14. Average cost is above its minimum point,so not productively efficient

          

  15. Owners and managers control some of the factors of that make a firm successful such aszero long run profit

          

  16. To find profit from looking at graphthe line where the demand/price, ATC, and MR have the same quantity. (P-ATC) x Q

          

  17. In a monopolistic competitive market havemany firms, firms sell different products, and no barriers to entry to new firms entering the industry

          

  18. Monopolistically competitive firms produce the quantity whereMC=MR

          

  19. Think of the long-run asthe actions of a firm intended to maintain the differentiation of a product over time, otherwise they risk heading toward the long-run outcome of zero economic profit

          

  20. Recent research has shown that the first firm to enter a market oftendoes not have a long-lived advantage over later entrants.

          

  21. Marketing-a critical element of marketing for monopolistically competitive firms
    -firms can increase demand for their products.
    -using it to differentiate their products: effectively making the demand curve more inelastic

          

  22. Allocative efficiency refers toproducing all goods up to the point where the marginal benefit to consumers is just equal to the marginal cost to firms

          

  23. More inelastic demand curve allows firmsto charge a higher price and earn more short-run profit

          

  24. Brand managementthe vertical difference between demand and marginal revenue curves

          

  25. Short-run, firm making loss-In the long run, the firm must break even
    -Notice that the ATC curve is just tangent to the demand curve. The best the firm can do is to produce that quantity
    -There is no quantity at which the firm can make a profit; the ATC curve is never below the demand curve

          

  26. Long-run, firm breaking even-In the long run, the firm must break even
    -Notice that the ATC curve is just tangent to the demand curve. The best the firm can do is to produce that quantity
    -There is no quantity at which the firm can make a profit; the ATC curve is never below the demand curve

          

  27. 3 features of perfectly competitive marketmany firms, firms sell identical products, and no barriers to entry to new firms entering the industry

          

  28. a monopolistically competitive firm should not simply try to maximize revenue becausethe lowest possible average cost.

          

  29. Use the marginal cost and marginal revenue curves to determine quantity; then usethe demand and average total cost curves to determine price, cost, and profit or loss

          

  30. In the long-run, monopolistically competitive firmsmany firms, firms sell different products, and no barriers to entry to new firms entering the industry

          

  31. "Owning a market" bya market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products

          

  32. The marginal benefit to consumers is given by the demand curve, sozero long run profit

          

  33. Productive efficiency refers toproducing all goods up to the point where the marginal benefit to consumers is just equal to the marginal cost to firms

          

  34. This profit will attract new firms who will compete with Starbucks, reducing the demand for Starbucks' caffè lattes. So demandmany firms, firms sell identical products, and no barriers to entry to new firms entering the industry

          

  35. Although our model predicts zero economic profit in the long run, the long run mightbe delayed indefinitely by innovative firms

          

  36. Profit maximization requires producing until the marginal revenue from the last unit is just equal to the marginal costMC = MR

          

  37. Monopolistically competitive firms produce the quantity where MC = MR, and notMC=MR

          

  38. Thiel recommends entrepreneurs focus on the monopoly part of monopolistic competition,there are economic profits to be made in the short run if you can "own a market"

          

  39. How will graphs of monopolistically competitive markets change as the market moves toward long-run equilibrium?-the demand curve will shift to the left and become more elastic because the firms are currently making profit
    -or the demand curve will shift to the right and become more inelastic

          

  40. A firm's ability to differentiate its product and to produce it at a lower average cost than competing firms creates ________ for its customersvalue

          

  41. Price effect of the price reductionrevenue increases because of the additional sale

          

  42. Monopolistic competition results in neitherproductive nor allocative efficiency

          

  43. By being the first to sell a particular good, a firm may gain a ______________, finding its name closely associated with the good in the public's mind.horizontal

          

  44. Firms must always try to maintain the perception of their product as better than others, making sure thatsome of McDonald's customers, but not all of them, will still demand McDonald's cheeseburgers because they may prefer McDonald's cheeseburgers to cheeseburgers at other fast-food restaurants

          

  45. Many firms and identical products implies a ____________ demand curveMC≠MB: not allocatively efficient

          

  46. A successful brand name can help tothe actions of a firm intended to maintain the differentiation of a product over time, otherwise they risk heading toward the long-run outcome of zero economic profit

          

  47. Trademarked brands are threatened bythe actions of a firm intended to maintain the differentiation of a product over time, otherwise they risk heading toward the long-run outcome of zero economic profit

          

  48. One way in which monopolistically competitive markets and perfectly competitive markets differ is that in long-run equilibrium, monopolistically competitive firms-the demand curve will shift to the left and become more elastic because the firms are currently making profit
    -or the demand curve will shift to the right and become more inelastic

          

  49. For any firm with a downward-sloping demand curve, the marginal revenue curve must thereforeMC = MR

          

  50. Key factors that determine a firm's profitabilitychance events, factors affecting a firm's entire market, a firm's average cost of production relative to that of competing firms, differentiation of a firm's product from other products