ECON 101 Study Guide - Final Guide: Nash Equilibrium, Monopolistic Competition, Normal-Form Game

41 views11 pages

tanfly138

12 Oct 2016

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

A monopolistically competitive industry is somewhere between a perfectly competitive industry and a monopoly. Characteristics: large number of firms compete, each firm produces a differentiated product, firms compete on price and quality, free entry and exit. Product differentiation- each firm makes a product or supplies a service that is slightly different from the products or services supplied by other firms. Ways in which products are differentiated: price, quality, marketing (advertising and packaging) Entry and exit- in the short run there is free entry and exit from a monopolistically competitive industry. When firms are making positive profit in a monopolistically competitive industry, new firms will enter. When losses are incurred some firms will leave the industry. Price and output in a monopolistically competitive industry. Firms operating in a monopolistically competitive industry produce the level of output that equates marginal revenue with marginal cost. Long run equilibrium in a monopolistically competitive industry.

Related Questions

25. One difference between perfect competition and monopolistic competition is A) firms in a perfectly competitive market produce similar but slightly different products. B) in perfect competition, the product produced has no close substitutes. C) monopolistic competition has barriers to entry, whereas perfect competition has none. D) a small number of firms compete in a monopolistically competitive market and a large number of firms compete in a perfectly competitive market. E) firms in monopolistic competition have some degree of market power.

1. A monopoly market structure is characterized by

a. large number of firms, standardized products, easy entry and exit.

b. large number of firms, differentiated products, easy entry and exit.

C. small number of firms, standardized or differentiated products, difficult entry.

d. one firm, a unique product without close substitutes, and impossible entry.

e. one firm, differentiated product, impossible entry.

2. Which of the following is not a characteristic of monopolistic competition?

a. Differentiated products

b. A downward-sloping demand curve for individual firms

c. Firms that are price makers

d. Impeded entry into the industry

e. A large number of firms

3. One factor that distinguishes oligopoly from other market structures is

a. the ease of entry into the market.

b. the interdependence of firms.

c. the slope of the demand curve.

d. the degree of product differentiation.

e. the amount of advertising expenditures.

lavenderbat941

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

byzantiumfish483

ECON 101 Study Guide - Final Guide: Nash Equilibrium, Monopolistic Competition, Normal-Form Game

Document Summary

Get access

Related Documents

ECON 101 Study Guide - Final Guide: Monopolistic Competition, Average Variable Cost, Marginal Revenue

ECON 101 Midterm: ECON 101 UW Madison Midterm3v1Fall2001

6355 Lecture Notes - Lecture 7: Nash Equilibrium, Game Theory, Monopolistic Competition

Related Questions