ECON 203 Study Guide - Quiz Guide: Monopolistic Competition, Deadweight Loss, Market Power

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ceruleanllama868

23 Mar 2019

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Chapter 15 international trade + general questions from students: multiple choice questions, all of the following statements are incorrect except, a monopolist is a price taker. Firms in a monopolistic competitive market have no control over the market price of their product. Sometimes it is difficult to distinguish between firms that are monopolistically competitive and those that are oligopolistic. In a monopoly market structure, there are few barriers to new firms entering the market. International trade brings higher living standards by permitting greater specialization. In the short run, all individuals benefit from international trade. Short question: the sidewalk jewellery market in montreal is monopolistically competitive. Ans: set mr=mc, q=50, mc=52, p*q=,100, tc=,351, so profits=,749. (ii) predict what is going to happen in the long run to this firm. Ans: since short run profits are positive, outsiders will also want to join and set up their own stands. Entry will divide the demand into many smaller segments, hence demand shifts inward.

Related Questions

A major difference between monopolistic competition and perfect competition is:

a. there are barriers to entry in monopolistic competition. There are no barriers to entry in perfectly competitive markets.

b. monopolistically competitive firms sell differentiated products. Perfectly competitive firms sell identical products.

c. government regulation restricts the ability of monopolistically competitive firms to change their prices. Perfectly competitive firms face no price regulation.

d. the market demand curve in a monopolistically competitive market slopes downward. The market demand curve in a perfectly competitive market is horizontal

bronzecattle701

1) During the past 20 years, Marzi Corp., a large firm in an oligopolistic industry, has changed prices a number of times. Each time it does so, the other firms in the industry follow suit. Dominator Inc. is a _____.

A. price follower

B. price leader

C. monopolistically competitive firm

D. monopolist

E. perfectly competitive firm

2) 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

3) 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

coffeearmadillo441

1. Which of the following statements about oligopolies is not correct?

a.		Oligopolistic firms always charge the monopoly price.
b.		Oligopolistic firms are interdependent in a way that firms in perfect competition are not.
c.		An oligopolistic market has only a few sellers.
d.		The actions of any one seller can have a large impact on the profits of all other sellers.

2. Which is true of an oligopoly market that reaches a Nash equilibrium?

a.		The firms will not have behaved as profit maximizers.
b.		A firm will have chosen its best strategy, given the strategies chosen by other firms in the market.
c.		A firm will not take into account the strategies of competing firms.
d.		The market price will be different for each firm.

3. In game theory, what is a dominant strategy?

a.		the best strategy for a player to follow, regardless of the what strategies other players use
b.		a strategy that makes every player better off
c.		a strategy that must appear in every game
d.		the best strategy for a player to follow only if other players are cooperative

4. Which of the following situations produces the largest profits for oligopolists?

a.		The firms reach a Nash equilibrium.
b.		The firms combine to produce the monopoly output level.
c.		The firms set prices equal to marginal cost.
d.		The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome.

ECON 203 Study Guide - Quiz Guide: Monopolistic Competition, Deadweight Loss, Market Power

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