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The market structure in which natural or legal barriers prevent the entry of new firms and a small number of firms compete is
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oligopoly.
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The market structure in which natural or legal barriers prevent the entry of new firms and a small number of firms compete is
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oligopoly.
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Which one of the following is true for a single-price monopolist but not for a perfectly competitive firm?
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The firm maximizes profit by setting marginal cost equal to marginal revenue.
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Which one the following industries is the best example of an oligopoly?
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the automobile industry
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In a perfect competitive market, the market demand curve is illustrated by
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a downward-sloping curve.
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Within a monopolistically competitive industry,
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firms can freely enter and exit, and economic profit is zero in the long run.
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Why might only a few firms dominate an oligopolistic industry?
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A natural or legal barrier to entry exists.
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Toronto has a large number of retail stores that sell clothes. Each store has its own characteristics which differ from the other stores. The clothing business in Toronto is an example of
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a monopolistically competitive market.
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The slope of a perfectly competitive firmʹs demand curve is
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zero.
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Which of the following goods is best described as being sold in a monopolistically competitive
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fast food
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In comparison to a perfectly competitive industry, a single-price monopolist with the same costs creates a ________ consumer surplus and makes ________ economic profit.
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smaller; a larger
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Which one of the following quotations best describes the kinked demand curve model of oliogopoly?
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ʺEvery time Sparrowʹs Donuts has a donut sale, so does Tim Hortonʹs.ʺ
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If a perfectly competitive firm in the short run is able to pay its variable costs and part, but not all, of its fixed costs, then it is operating in the range on its marginal cost curve that is anywhere
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between the shutdown and break-even points.
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If a profit-maximizing monopoly is producing an output at which marginal cost exceeds marginal revenue, it
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should raise price and decrease output.
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Complete the following sentence. Marginal revenue is
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the change in total revenue that results from a one-unit increase in the quantity sold.
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Monopolistic competition differs from monopoly because in monopolistic competition
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firms are free to enter and exit.
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The maximum loss a firm will experience in the short run equals
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its total fixed cost.
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A monopolist under rate of return regulation has an incentive to
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pad costs.
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Which one of the following does not occur in perfect competition?
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There are significant restrictions on entry into the market.
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Assume that the leather market is a perfectly competitive market. The market demand curve for leather is ________ and each individual leather producerʹs demand curve is ________.
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downward sloping; horizontal
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One factor that distinguishes a monopoly from monopolistic competition is that
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close substitutes are available in monopolistic competition.
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If a perfectly competitive firm is producing in the short run at an output where price is less than average total cost, the firm
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is incurring an economic loss but will continue to operate as long as price is above minimum average variable cost.
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Consumer surplus is
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less in the case of a single-price monopoly than in the case of a perfectly competitive industry.
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In monopolistic competition
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firms practice product differentiation.
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In the long run, all firms in an industry that are monopolistically competitive
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make zero economic profit.
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A cartel is
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an arrangement among firms to reduce output and raise prices.
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an arrangement among firms to reduce output and raise prices.
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There are significant restrictions on entry into the market.
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If a firm faces a perfectly elastic demand for its product, then
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its marginal revenue curve is horizontal at the market price.
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According to the kinked demand curve theory of oligopoly, each firm believes that if it raises its price,
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other firms will not raise theirs.
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In monopolistic competition, firms compete on the basis of
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price, quality, and marketing.
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