ECON-1006EL Chapter Notes - Chapter 8: Price Discrimination, Deadweight Loss, Economic Surplus

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plumbee368

6 Dec 2016

School

Laurentian

Department

Economics / Science Èconomique

Course

ECON-1006EL

Professor

Mac Lean Brian

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Document Summary

In the real world, we can distinguish among 3 broad types of imperfectly competitive markets: pure monopoly, oligopoly, and monopolistic competition. Pure monopoly a market in which there is only one supplier of a unique product with no close substitutes (each of which is called a monopolist) Ex. people of a neighborhood must buy electricity from their local supplier, or do without. Oligopoly a market in which there are only a few rival sellers (each of which is called an oligopolist) Monopolistic competition a market structure in which a large number of firms sell slightly differentiated products that are reasonably close substitutes for one another (each of which is called a monopolistic firm) A monopolistically competitive firm is one of many firms that produce slightly different but very similar goods. The firms that participate in any of these 3 market types can be called imperfectly competitive firms. The essential difference between perfectly and imperfectly competitive firms.

Related Questions

1. Which market structure is characterized by a few interdependent firms?

A) Monopoly.

B) Perfect competition.

C) Monopolist competition.

D) Oligopoly.

2. The correct ranking (put in order) of the degree of market power (from highest to lowest) is

A) Monopoly, monopolistic competition, perfect competition, oligopoly

B) Monopoly, monopolistic competition, oligopoly, perfect competition.

C) Monopoly, oligopoly, monopolistic competition, perfect competition.

D) Oligopoly, monopoly, monopolistic competition, perfect competition.

3. The term monopolistic competition

A) is an alternate expression for monopoly

B) is used to describe perfect competition with strong entry barriers.

C) denotes an industry with one seller of many differentiated products

D) denotes an industry with many sellers of differentiated products.

ceruleanseal203

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

crimsonalligator541

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

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ECON-1006EL Chapter Notes - Chapter 8: Price Discrimination, Deadweight Loss, Economic Surplus

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