question
Which of the following is an assumption of the theory of oligopoly?
answer
Firms produce and sell either homogenous or differentiated products
question
In what industry structure is the mutual interdependence of the firms an important feature?
answer
Oligopoly
question
Monopolistically competitive firms differentiate their products by:
answer
Selling products with slightly different physical characteristics, at different locations, and creating a special image for the product through advertising.
question
Which of the following conditions would prevent price discrimination?
answer
the ability to prevent low -price customers from reselling to high price customers
question
The economic inefficiency of a monopolist can be measured by
answer
the deadweight loss
question
Price discrimination is when a firm charges
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different prices for the same goods to different consumers
question
A monopolistically competitive firm is producing at an output level in the short run where average total cost is $3.50, price is $3.00, marginal revenue is $1.50, and marginal cost is $1.50. The firm is operating
answer
with an economic profit in the short run
question
A benefit to consumers of monopolistically competitive markets is that
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consumers have a variety of products from which to choose
question
If short-run economic profits are greater than zero for firms in a monopolistically competitive market, in the long run we expect
answer
competing firms to enter the market and sell similar products, competing profits away.
question
The firms with any market power marginal revenue curve is
answer
downward sloping and twice as steep as demand
question
Price discrimination is related to elasticity because
answer
the firm can increase revenues by charging customers with elastic demands lower prices and charging customers with inelastic demands higher prices.
question
When oligopolists collude the results are generally
answer
smaller output and higher price
question
In maximizing profits, a monopolist will charge a price that is
answer
greater than marginal cost
question
Restaurants, car dealerships, clothing stores, and music stores are examples of industries in which firms differentiate their products by offering them at more locations. This is an example of a ______ market
answer
monopolistically competitive.
question
A market in which there are many firms each selling differentiated products is most likely a
answer
monopolistically competitive
question
In general, firms in a cartel
answer
agree to charge the price the monopolist would charge
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