ECN 104 Chapter Notes - Chapter 9: Monopolistic Competition, Foreign Exchange Market, Perfect Competition

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lemontermite318

23 Nov 2017

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Chapter 9: perfect competition in the short run. Since we cannot examine each industry individually, we will focus on four basic models of market structure. Economists group industries into four distinct market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. New firms can enter the industry very easily. In the monopoly market structure one firm is the sole seller of a product or service (for example, a regional electrical power supplier). Since the entry of additional firms is blocked, one firm constitutes the entire industry. The monopolist producers a unique product, so product differentiation is not an issue. In monopolistic competition, a relatively large number of sellers produce differentiated products (clothing, furniture, books). Entry to monopolistically competitive industries is quite easy. Perfect competition is characterized by: very large numbers: a basic feature of a perfectly competitive market is the presence of a large number of independently acting sellers offering their products in large national or international markets.

Related Questions

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

If an industry has no barriers to entry, no product promotion strategy, a standardized product type, and a very large number of firms operating within it, the industry can be said to have

Select one:

a. a monopoly market structure.

b. perfect competition.

c. differentiated market.

d. monopolistic competition.

e. an oligopoly market structure.

The long-run average-cost curve

Select one:

a. connects the minimum points of all the short-run average-total-cost curves.

b. connects the maximum points of all the short-run average-total-cost curves.

c. connects minimum points on the short-run total-cost curves.

d. indicates the most efficient scale of operation for a given level of output.

e. is the most efficient scale of operation.

1)Which of the following is true about the Sherman Act?

A.It prohibited price discrimination.

B. It prohibited price-fixing and collusion.

C. It prohibited mergers if it led to weakened competition.

D. It made engaging in predatory activities illegal.

E. It encouraged firms to take advantage of the patent system.

2)
Which of the following is true of price discrimination?

A. Customers need to differ in their willingness to pay for price discrimination to occur.

B. Customers need to have a unit elastic demand curve for price discrimination to occur.

C. Price discriminators profit by charging a uniform price to all customers.

D. Price discriminators lack the incentive to reduce their average total cost of production.

E. Customers can easily resell a good to other customers if there exists price discrimination in the market for the good.

3) Which of the following types of firms do not practice price discrimination?

A. Airlines

B. Movie theaters

C. Soft drink companies

D. Colleges

E. Amusement parks

4) Oligopoly, like perfect competition, is a market structure in which firms can easily enter and leave the industry.

a. True
b. False

Monopolistic competition is characterized by:

A. A large number of firms selling differentiated products.

B. A perfectly elastic demand curve.

C. High barriers to entry.

D. large number of firms selling identical products.

E. A small number of firms selling differentiated products.

6) Which of the following is not a source of product differentiation?

A. Prestige considerations in products

B. Differences in the cost of production of products

C. Physical differences in products

D. Differences in the services provided by firms

E. Differences in the location of sales outlets

7) The restaurants in San Francisco can probably be categorized as examples of firms

A. operating in an oligopolistic market.

B. operating in a monopolistically competitive market

C. operating in a perfectly competitive market

D. forming a cartel.

E. Operating in a monopolistic market

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ECN 104 Chapter Notes - Chapter 9: Monopolistic Competition, Foreign Exchange Market, Perfect Competition

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