Log in
Economics
1
answer
0
watching
394
views

The presence of competition in free markets:

A. is undesirable because it results in unnecessary duplication of efforts.

B. usually results in better quality and lower prices.

C. is rare since most markets eventually evolve into monopolies.

D. is undesirable because one big firm can usually produce goods more efficiently than a large number of small firms

Watch
1
answer
0
watching
394
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Khushboo Goyal
Khushboo GoyalLv5
29 Aug 2020

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

If competition decreases in a certain industry

Select one:

a. it would not matter because competition has very little affect in a market economy.

b. A company that is in that industry may have and exert more economic power.

c. Resources will be allocated more efficiently

d. Prices will most likely be lower in that industry

Question 2

Question text

The Sherman Anti-Trust Act

Select one:

a. Gave monopolies a legal right to exist and grow

b. Gave all unions money to pay their members

c. Was a governmental attempt to promote and encourage competition.

d. Created new policies to ensure that workers’ compensation was given to all workers

Question 3

Question text

One reason the government is involved in the U.S. economy is to

Select one:

a. regulate industries in which a monopoly is in the public interest

b. encourage monopolies

c. discourage competition

d. promote the development of negative externalities

Question 4

Question text

Under perfect competition

Select one:

a. The buyers are usually uninformed

b. Market equilibrium sets the price of goods and services

c. The government determines how much of a good to produce.

d. The seller tends to spend much effort in advertising its product because of product differentiation.

Question 5

Question text

The Clayton-Anti Trust Act

Select one:

a. Was never passed

b. Helped monopolists grow wealthier

c. Was passed to lower the taxes on the most wealthy Americans

d. Outlawed price discrimination

1. When a firm is in a monopolistic competition market, if the firm sells 25 goods at a product price of $10, what is the marginal revenue per unit of the good sold if it sells 5 additional goods when it reduced the product price to $9.

A. $270 B. $20 C. $4 D. $2.50

2. An article in the New York Times on technology in the 1990s, Michael Lewis wrote, 'The sad truth, for investors, seems to be that most of the benefits of new technologies are passed right through to consumers free of charge.' Lewis meant what when he said the benefits of new technology were "passed right through to consumers free of charge'?

A. In perfect competition, price equals the marginal cost of production. In this sense, consumers receive the new technology 'free of charge.'

B. In perfect competition, consumers place a value on the food equal to its marginal cost of production and since they are willing to pay the marginal valuation of the good, they are essentially receiving the new technology 'free of charge.'

C. In the long run, price equals the lowest possible average cost of production. In this sense, consumers receive the new technology 'free of charge.'

D. Firms in perfect competition are price takers. Since they cannot influence price, they cannot dictate who benefits from new technologies, even if the benefits of new technology being "passed right through to consumers free of charge.

3. 'The perfectly competitive market structure benefits consumers because.

A. Firms are forced by competitive pressure to be as efficient as possible.

B. Firms produce high-quality goods at low prices.

C. Firms add a much smaller markup over average cost than firms in any other type of market structure.

D. Firms do not produce goods at the lowest possible price in the long run.

1. Characteristics of competitive markets

The model of competitive markets relies on these three core assumptions:

1. There must be many buyers and sellers a few players can't dominate the market.
2. Firms must produce an identical product buyer must regard all sellers' products as equivalent.
3. Firms and resources must be fully mobile, allowing for free entry into and exit from the industry.

The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behaviour, assume for this problem that a market cannot maintain competition in the long run without free entry.

Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.

Is the scenario Competitive?
Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.  
In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.  
Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States.  
In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.  

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in