ECON 208 Chapter Notes -Monopolistic Competition, Productive Efficiency, Allocative Efficiency

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peachdeer29

23 Mar 2012

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ECON 208 Full Course Notes

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The majority of industries in canada are made up of firms that are small relative to the size of the market in which they sell. Individual firms are price takers and produce more-or-less the same product. Each store has a unique location that may give it local market power. Industries dominated by either a single firm or a few large ones. Firms engage in competitive behaviour and produce a range of products that are differentiated form each other and from the products of other large firms. Most modern industries that are dominated by large firms contain several firms. Concentration ratio: the fraction of total market sales controlled by a specified number of the industry"s largest firms: often used as an indicator of market power. Defining the market: the main problem associated with using concentration ratios is to define the market with reasonable accuracy: this process is difficult.

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

A monopolistically competitive industry is like a purely competitive industry in that:

A. each industry produces a standardized (i.e. homogeneous) product.
B. non-price competition is a feature of both industries.
C. neither industry has significant barriers to entry.
D. firms in both industries face a horizontal demand curve