ECO 201 Chap 12
A monopolistically competitive market is described as one in which there are
A large number of firms selling similar, but not identical products.
Which of the following is the best example of a firm that competes in a monopolistically competitive market
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
For the monopolistically competitive firm
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)
A monopolistically competitive firm maximizes profit in the short run by producing where
The price is greater than marginal cost
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
If firms in a monopolistically competitive industry are making profits in the short run
New firms will enter the market
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
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.
In long run equalibrium compared to a perfectly competitive market a monopolistically competitive industry produces a
level of output and charges a
Which of the following statements is true?
Sheer chance can play a significant role in the success or failure of a business
To maximize their profits and defend those profits from competitors, monopolistically competitive firms must
Differentiate their products
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
Firms use two marketing tools to differentiate their products. What are these two tools
Brand Management and advertizing
ECO 201 Chap 12