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14.3   Product Development and Marketing 1) An advantage of monopolistic competition

Question : 14.3   Product Development and Marketing 1) An advantage of monopolistic competition : 1418024

 

14.3   Product Development and Marketing

 

1) An advantage of monopolistic competition over perfect competition is

A) economic profit.

B) product variety.

C) excess capacity.

D) efficiency.

E) economies of scale.

 

2) Because consumers value product variety,

A) society must be more efficient with monopolistic competition than with perfect competition.

B) the inefficiency of monopolistic competition is partially offset.

C) in the long run, monopolistic competition firms make economic profit.

D) monopolistically competitive industries are efficient.

E) no two goods of the same type will have equal prices.

3) Selling costs

A) are variable costs that increase total cost.

B) always increase demand for a firm's product.

C) always decrease demand by increasing competition.

D) always provide consumers with valuable services.

E) include marketing expenditures on advertising and packaging.

 

4) Advertising by firms in monopolistic competition

A) does not provide consumers with useful information.

B) increases the marginal cost of production.

C) is inefficient.

D) is a waste of valuable resources because firms are forced by the entry of rival firms to be price takers.

E) generates the perception among consumers that product differentiation exists.

 

5) The decision to undertake product development in monopolistic competition is made by comparing the

A) marginal benefit of product development to the marginal cost of product development.

B) marginal revenue of product development to the average total cost of product development.

C) total revenue of product development to the total cost of product development.

D) firm's expenditure on product development to expenditures by competing firms.

E) none of the above.

 

6) In monopolistic competition, advertising costs

A) are fixed costs.

B) can result in the firm producing an amount of output such that its average total cost is lower than if it did not advertise.

C) shift the ATC curve upward.

D) all of the above answers are correct.

E) none of the above answers are correct.

7) Advertising costs in monopolistic competition increase a firm's

A) total fixed cost.

B) marginal cost.

C) total variable cost.

D) average variable cost.

E) both A and B are correct.

 

8) If a firm spends $600 on advertising, its

A) ATC and MC curves shift upward.

B) MC curve shifts upward and its ATC curve does not shift.

C) ATC curve shifts upward and its MC curve does not shift.

D) ATC curve shifts upward and its MC curve shifts downward.

E) AFC and AVC curves shift upward.

 

9) Advertising costs are ________ costs and the per unit cost of advertising ________ as production increases.

A) fixed; increases

B) variable; increases

C) fixed; decreases

D) variable; does not change

E) variable; decreases

 

10) Expenditures on advertising

A) can lower average total cost if the advertising increases the quantity sold by a large enough amount.

B) cannot lower average total cost because when a firm advertises it increases its costs.

C) always lower average total cost because whenever a firm advertises, it increases the quantity sold.

D) are variable costs so do not affect the average total cost.

E) lower total cost if the advertising increases the quantity sold by a large enough amount.

 

Solution
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