ECO 201 Chap 12

  1. A monopolistically competitive market is described as one in which there are
    A large number of firms selling similar, but not identical products.
  2. Which of the following is the best example of a firm that competes in a monopolistically competitive market
  3. When a monopolistically competitive firm lowers it price there is one positive and noe netgative impacts that occurs and affects the firms' revenues. What is the positive impact called
    The output effect
  4. For the monopolistically competitive firm
  5. The demand curve of a monopolistically competitive firm
    • Is downward sloping because it must cut its price to sell more
    • (Demand curve always slants downward)
  6. A monopolistically competitive firm maximizes profit in the short run by producing where
    • The price is greater than marginal cost
    • MR=MC
    • P>MC
    • P>MR
  7. If MCDonalds is successful at luring away Starbuvks customers, what will be the effect on Starbucks demand and marginal revenue curves
    Both will shift towards the left
  8. If firms in a monopolistically competitive industry are making profits in the short run
    New firms will enter the market
  9. In the long run if the demand curve of a monopolistically competitive firm is tangent to it average total cost curve then
    The firm would break even
  10. Excess capacity is a characteristic of monopolistically competitive firms. Wht does excess capacity mean?
    It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curve.
  11. In long run equalibrium compared to a perfectly competitive market a monopolistically competitive industry produces a lower level of output and charges a higer price
    lower higher
  12. Which of the following statements is true?
    Sheer chance can play a significant role in the success or failure of a business
  13. To maximize their profits and defend those profits from competitors, monopolistically competitive firms must
    Differentiate their products
  14. The most important of the factors that make a firm successful and that can be controlled by thei firms owners and managers are
    The differentiation of its products and the production of products at a lower average cost than competing firms
  15. Firms use two marketing tools to differentiate their products. What are these two tools
    Brand Management and advertizing
Card Set
ECO 201 Chap 12
Demand Curves