ECN 104 Chapter Notes - Chapter 11: Allocative Efficiency, Monopolistic Competition, Oligopoly

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viridiancrow801

11 May 2016

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Many aspects of retailing and some manufacturing industries in which economies of scale are few, approximate monopolistic competition. The four-firm concentration ratio measures the percentage of total industry output accounted for by the largest four firms: the herfindahl index sums the squares of the market shares of all firms in the industry. Monopolistically competitive firms may earn economic profits or incur losses in the short run: the easy entry and exit of firms results in only normal profits in the long run. In practice, the monopolistic competitor seeks the specific combination of price, product, and advertising that will maximize profit. Chapter 11-monopolistic competition and oligopoly: products may be either virtually uniform or significantly differentiated, various barriers to entry, including economies of scale, underlie and maintain oligopoly. Higher concentration ratios are an indication oligopoly (monopoly) power: by giving more weight to larger firms, the herfindahl index is designed to measure market dominance in an industry.

Related Questions

1. A monopoly market structure is characterized by

a. large number of firms, standardized products, easy entry and exit.

b. large number of firms, differentiated products, easy entry and exit.

C. small number of firms, standardized or differentiated products, difficult entry.

d. one firm, a unique product without close substitutes, and impossible entry.

e. one firm, differentiated product, impossible entry.

2. Which of the following is not a characteristic of monopolistic competition?

a. Differentiated products

b. A downward-sloping demand curve for individual firms

c. Firms that are price makers

d. Impeded entry into the industry

e. A large number of firms

3. One factor that distinguishes oligopoly from other market structures is

a. the ease of entry into the market.

b. the interdependence of firms.

c. the slope of the demand curve.

d. the degree of product differentiation.

e. the amount of advertising expenditures.

lavenderbat941

Microeconomics

A	B	Answer
As a student of economics, when you speak of scarcity, you are referring to the ability of society to.	A. Extra benefit
What is the economic meaning of the expression that "There is no such thing as a free lunch?"	B. Entrepreneur.
Which expression is another way of saying "marginal benefit"?	C. Very limited government role in the economy
A tradeoff exists between two economic goals, X and Y. This tradeoff means that.	D. Price ceilings and the resulting product shortages.
The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the	E. Explicit costs.
The Soviet Union economy of the 1980s would best be classified as	F. Easy entry, many firms, and differentiated products
The simple circular-flow model shows that workers, entrepreneurs, and the owners of land and capital offer their services through	G. Product markets
Laissez-faire capitalism is characterized by	H. Satisfy economic wants given limited resources.
Black markets are associated with	I. Oligopoly
Cash expenditures a firm makes to pay for resources are called	J. The Resource Markets
Which set of characteristics below best describes the basic features of monopolistic competition	K. A command System
Mutual interdependence would tend to limit control over price in which market model	L. Getting more of X requires getting less of Y
Markets in which firms sell their output of goods and services are called	M. It means that there is an opportunity cost when resources are used to provide "free" products

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ECN 104 Chapter Notes - Chapter 11: Allocative Efficiency, Monopolistic Competition, Oligopoly

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