ECON 1201 Lecture Notes - Lecture 19: Market Power, Toothpaste, Perfect Competition

32 views3 pages

Verified Note

whitegoose773

30 Oct 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

ECON 1201 verified notes

19/30View all

ECON 1201 Lecture Notes - Lecture 18: Average Variable Cost, Marginal Cost, Diminishing Returns

ECON 1201 Lecture Notes - Lecture 19: Market Power, Toothpaste, Perfect Competition

ECON 1201 Lecture Notes - Lecture 20: Taipei Metro, Marginal Revenue, Profit Maximization

Document Summary

No one firm has individual effect on the market. Type of product - identical (standard/homogeneous) (agriculture - potato, Price is determined by the market and the firms cannot charge a different price. Desire for firms to move toward mc. # of firms - many but not as many as pc. Ease - no barriers of entry (easy to start) Not total control over the individual price, but if their product is different enough they can charge more (egg in cage) Due to ease of barriers of entry. # of firms - few firms (with a few being dominant) Type of product - either identical or differentiated. Ease - barriers (not impossible to start but still difficult) These firms cannot control price therefore the must control cost structure and output. Perfect competition: key characteristics: there are many buyers and sellers each with a small market share. Market share: fraction of the total industry output accounted for by that producer"s output.

Related Questions

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

1. if the government attempts to break up a natural monopoly to enforce competition in an industry

A. the average cost of producing the good will increase

B. the smallest firm will have a significant cost advantage over the larger, less efficient firms

C. the average cost of producing the good will decrease

D. the price paid by consumers will be expected to remain the same.

2. which statement is true?

A. the monopolistic competitor always makes a profit in the short run

B. the monopolistic competitor operates at peak efficiency

C. product differentiation takes place in the minds of the buyers

D. none of these statements is true

3. Price discrimination

A. occurs when a good or service is resold

B. is prohibited by law

C. occurs when a seller charges two or more prices for the same good or service

D. occurs when the seller charges different prices for different quality products

4. Monopolistic competition may lead to each of the following except

A. inefficiency

B. overdifferentiation

C. overcapacity

D. monopoly profits

5. In the long run in monopolistic competition

A. most firms are making a profit

B. the absence of entry barriers ensures that there are no profits

C. economies of scale ensure that there are no profits

D. most firms are losing money

6. Price discrimination means

A. charging different prices for identical goods that have identical production costs

B. paying wages according to race or sex rather than productivity

C. exploiting the working masses by charging the highest single price possible.

D. eliminating all costs so that only pure profits are realized

7. The definition of monopolistic competition includes

A. few firms and ease of entry and exit

B. few firms and barrieres to entry and exit

C. many firms and barriers to entry and exit

D. many firms and ease of entry and exit

8. Which statement is true?

A. there are many firms in a monopolistically competitive industry.

B. monopolistic competitors produce an identical product

C. in order for product differentiation to take place, there must be clear physical differences amont the products sold

D. none is true

9. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

A. price equals minimum possible average total cost

B. price equals marginal cost

C. marginal revenue equals average total cost

D. price equals average total cost

10. Which statement is false?

A. Oligopolies are illegal in most states

B. most oligopolies engage in outright collusion

C. Ford motor company is an oligopoly

D. none of these statements is false

21)

Compared to the results in a perfectly competitive market, a monopoly does which of the following?

	It charges a higher price.
	It charges a price greater than the marginal cost.
	It produces less output.
	All of the above
	None of the above

22)

"X-inefficiency" refers to the idea that

	government restrictions on competition create a monopoly, which results in inefficiency.
	the cost of rent-seeking activity should be added to the welfare cost of monopoly.
	Generation X is less efficient due to a lack of competitive spirit.
	a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level.
	price discrimination results in inefficiently low cross-elasticities of demand.

23)

Firms in which of the following market structures can engage in price discrimination?

	monopoly
	oligopoly
	monopolistic competition
	All of the above
	None of the above

24)

Monopolistic competition and perfect competition are in all of the following ways except

	Barriers to entry are low in both
	There are many firms in both
	Firms in both produce the output level where MR=MC
	Nonprice competition is important in both

25)

To get rid of excess capacity from the monopolistic competition in the long run, what would have to be given up?

	Free entry and exit.
	economic rent
	resource allocative efficiency
	differentiated product
	productive efficiency

taupeant454

ECON 1201 Lecture Notes - Lecture 19: Market Power, Toothpaste, Perfect Competition

ECON 1201 Lecture Notes - Lecture 18: Average Variable Cost, Marginal Cost, Diminishing Returns

ECON 1201 Lecture Notes - Lecture 19: Market Power, Toothpaste, Perfect Competition

ECON 1201 Lecture Notes - Lecture 20: Taipei Metro, Marginal Revenue, Profit Maximization

Document Summary

Get access

Related Documents

ECON 1201 Lecture Notes - Lecture 27: Monopolistic Competition, Perfect Competition, Product Differentiation

ECON 1201 Lecture Notes - Lecture 20: Marginal Revenue, Perfect Competition, Toothpaste

ECON 1201 Study Guide - Final Guide: Public Good, Information Asymmetry, Profit Maximization

Related Questions