ECON 102Quiz 09. (Pennsylvania State University). All the correct Answers Indicated.

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ECON 102 Quiz 09 Question 1 1 / 1 pts Unlike a monopolist’s product, a monopolistically competitive firm’s product is homogeneous is unique Correct! has many close sub... stitutes has no close substitutes Firms in monopolistic competition produce differentiated products which are close substitutes for each other, Question 2 0 / 1 pts Which two industry structures are characterized by easy entry and exit? Perfect competition and monopolistic competition Perfect competition and monopoly Oligopoly and monopolistic competition Oligopoly and perfect competition You Answered Oligopoly and monopoly. Assumptions made about the different industry structures Question 3 1 / 1 pts The restaurant industry is an example of a(n). perfectly competitive industry. monopoly. Correct! monopolistically competitive industry. oligopoly. Definitions of the different industry structures Question 4 1 / 1 pts In monopolistic competition, firms are large relative to the total market. Correct! firms are small relative to the total market. there is only one firm. firms produce identical products. Assumptions made about the different industry structures Question 5 0 / 1 pts Monopolistically competitive firms in long run equilibrium produce at _________ than the optimal scale. You Answered more than exactly less than sometimes more and sometimes less than A monopolistically competitive firm in long run equilibrium will produce a quantity less than the quantity that minimizes ATC Question 6 0 / 1 pts For a monopolistically competitive firm, in long run equilibrium You Answered P = MR = MC P < MR = MC P > MR > MC P > MR = MC Since a monopolistically competitive firm faces a downward sloping demand curve, price is greater than marginal revenue. Since the firm is maximizing profit in long run equilibrium, MR = MC. Question 7 0 / 1 pts Suppose a monopolistically competitive firm in the short run is selling 100 units of output at $10 each. At that level of output, MR = MC and marginal cost is rising. Also, ATC = $15, AVC = $12 and AFC = $3. This firm should continue to produce 100 units of output since MR = MC. You Answered increase output to the point where price equals marginal cost. decrease output to the point where marginal cost equals average total cost. shut down and produce 0 units of output. Since P < AVC, the firm should shut down. Question 8 1 / 1 pts A monopolistically competitive firm can sell as much output as it wants at the market price. Correct! must lower price to sell more output. sells a fixed amount of output, regardless of price. can change output, but cannot change price. A monopolistically competitive firm faces a downward sloping demand curve, so it must lower price to sell more output. Question 9 0 / 1 pts Refer to the figure above. If this firm is monopolistically competitive and is maximizing profit, it will earn a profit of $460 You Answered $200 $400 $60 Profit equals Q*(P – ATC). Question 10 1 / 1 pts Informative advertising is designed to change a consumer’s preferences and is usually associated with search goods. is designed to change a consumer’s preferences and is usually associated with experience goods. Correct! is designed to describe a product’s characteristics and is usually associated with search goods. is designed to describe a product’s characteristics and is usually associated with experience goods. Informative advertising is designed to describe a product’s characteristics and is usually associated with search goods. Quiz Score: 5 out of 10 [Show More]

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