In a certain monopolistically competitive market that is characterized by high prices and equally ...

In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise, if a firm's competitors begin to successfully introduce new products that cut into the firm's market share, the firm's best counter-strategy is to:
 a. raise prices in order to increase the revenue.
  b. introduce few new products in order to meet competitors head on.
  c. reduce its advertising budget in order to save costs.
  d. ignore its competitors and hope its customers' loyalty carry it through the threat.
  e. look to the government for protection.

QUESTION 2

Goods are scarce when:
 a. their price is too low.
  b. their price is too high.
  c. the amount people want is more than the amount available at a zero price.
  d. people want less of something as compared to what is available.
  e. their prices are controlled.

QUESTION 3

A monopolistically competitive firm's demand curve slopes downward because:
 a. new firms are free to enter the market.
  b. there are a large number of firms in the market.
  c. a differentiated product gives the firm some monopoly power.
  d. the firm has complete information about the market.
  e. the firm sells a standardized product.

QUESTION 4

To an economist, scarcity means that:
 a. it is very time-consuming to find a good.
  b. at a zero price, the available quantity of a good is insufficient to meet people's wants.
  c. a good is unavailable even at very high prices.
  d. at the current market price, the amount available is less than the amount that people want and are willing to pay for.
  e. resources are unlimited but people's desires are limited.

QUESTION 5

In the context of market structure, the characteristic that best describes a monopolistically competitive market is that:
 a. there are few firms in the market.
  b. the products produced cannot be easily differentiated.
  c. entry and exit are both difficult.
  d. firms spend a great deal on advertising and promotion.
  e. firms spend very little on advertising and promotion.

QUESTION 6

The concept of scarcity as used by economists refers to:
 a. a situation of excess supply.
  b. a situation in which the available resources are not enough to satisfy the wants of the people at a zero price.
  c. a situation in which an item is available only in very small quantities.
  d. a situation in which an item is very expensive.
  e. a situation in which a resource is nonrenewable.