Chapter 23

Question 1

A monopolistically competitive industry has

Answer 1

many firms producing a differentiated product

Question 2

Which statement is true?

Answer 2

Product differentiation takes place in the minds of the buyers.

Question 3

Price discrimination

Answer 3

occurs when a seller charges two or more prices for the same good or service

Question 4

Which statement is true about the monopolistic competitor in the long run?

Answer 4

It will be breaking even

Question 5

Price discrimination means

Answer 5

charging different prices for identical goods that have identical production costs.

Question 6

Through product differentiation, firms attempt to increase the

Answer 6

demands for their products, while making its demand less elastic

Question 7

Which of the following would NOT cause the costs in a monopolistically competitive industry to be higher than those in a competitive industry?

Answer 7

A large number of competitors

Question 8

An important result in long-run equilibrium in monopolistic competition is that the equilibrium point results in

Answer 8

price = ATC.

Question 9

Which is NOT a characteristic of monopolistic competition?

Answer 9

Each firm must take into account the actions of its rivals

Question 10

Which statement is true?

Answer 10

The monopolistic competitor has a more elastic demand curve than the monopolist

Question 11

Statement I. The airlines often engage in price discrimination.
Statement II. Price discrimination occurs when a seller charges two or more prices for the same good or service.

Answer 11

Both are true statements

Question 12

__________________ is the crucial characteristic of monopolistic competition

Answer 12

Product differentiation

Question 13

The typical monopolistic competitor

Answer 13

may compete on the basis of convenience, service, and ambience

Question 14

Which is the most accurate statement

Answer 14

Most firms in the United States are monopolistic competitors

Question 15

Product differentiation is _____ based on real physical differences among products

Answer 15

sometimes

Question 16

Product differentiation

Answer 16

takes place in the minds of the buyers.

Question 17

The typical monopolistic competitor

Answer 17

may be a drugstore, restaurant, gas station, or dry cleaner

Question 18

Monopolistic competition is similar to perfect competition for all of the following reasons except

Answer 18

both have identical demand and marginal revenue curves

Question 19

Monopolistic competition may lead to each of the following except

Answer 19

peak efficiency

Question 20

Which statement is true?

Answer 20

All of the choices are true.

The monopolistic competitor breaks even in the long run.
The monopolistic competitor operates at an output that is less than peak efficiency.
The monopolistic competitor has a small influence on price because its products are differentiated.
Monopolistic competitors have very elastic demand curves.

Question 21

In general, it is fair to say that Americans are provided with

Answer 21

a greater amount of product differentiation than people in most other countries.

Question 22

Which of the following is NOT an example of product differentiation?

Answer 22

Corn from an Iowa cornfield vs. corn from an Illinois cornfield

Question 23

An industry that has many firms producing a differentiated product would be classified as

Answer 23

monopolistically competitive

Question 24

Providing better service, ambience, or a convenient location are all forms of

Answer 24

product differentiation

Question 25

Each of the following is an example of price discrimination except

Answer 25

expensive blood tests in a medical lab for well-to-do medical patients