MGTA05H3 Study Guide - Quiz Guide: Mixed Economy, Market Economy, Monopolistic Competition
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Weekly Quiz 2 Competition
Questions 1: In an economy dominated by market transactions
a) producers and governments agree on how much to
b) economists, planners and politicians determine how
much to produce
c) the amount of currency available for loans determines
how much to produce
d) transactions between producers and consumers determine how much to
In a market economy, the amount produced is determined by the producers.
They review the market and determine how much they think they can sell. Those
predictions are based on past sales. So past transactions are the key
determinants of the amount of production.
Question 2: You are visiting a rural town in Wyoming, touring the Rocky Mountains.
Suddenly, your car breaks down on the road just past a little town. No one has passed
you in the last hour. You flip open your cell phone, only to discover there is no
signal. You walk back to the little town, and discover nothing is open. But look --
there on the corner is a pay phone booth. Who knew such things still existed? There
is even a phone book, and you find the number for an emergency towing service in the
next town. You pick up the receiver and, sure enough, there is a dial tone. You dial
the number, and the operator comes on to tell you that the number is a long distance
call, and will cost you $6. You are appalled -- your cell phone makes calls all over the
U.S. for free. At this point, the market for telephone service is
a) a monopoly market
b) an oligopolistic market
c) a market with monopolistic competition
d) a perfect market
At the point at which you need the service, there is only one provider. Even
though the wider market for telephone services might be different, at this point in
this particular market there is but one provider. So the degree of competition in
a market depends in many cases not only on the providers but also the consumer.
You cannot simply look at the situation of providers in general. You have to take
into account the particular needs and preferences of consumers.
Questions 3: You have agreed to take your 2 young neices out for the day. They are 6
and 8 years old. You quickly discover that they want to eat frequently, and that they
have strong preferences in what they eat. As lunch time approaches, you drive past a
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