Unit IV: Imperfect Competition

In this market structure there is only one seller with a unique product

• monopoly
• perfect competition
• monopolistic competition
• oligopoly

The airline industry is most likely in the market structure called

• perfect competition
• oligopoly
• monopolistic competition
• monopoly

In this market structure there are many buyers and sellers with identical products

• perfect competition
• monopolistic competition
• monopoly
• oligopoly

Which of the following is true of monopolists that practice price discrimination?

• They charge all customers the same price.

• They earn a smaller profit than those that do not practice price discrimination.

• They charge customers different prices according to different elasticities of demand.

• They produce lower quantities than pure monopolists.

• They produce the same quantity of output as pure monopolists.

In the long run, a monopolistically competitive firm will make

• more economic profit than a perfectly competitive firm.

• less economic profit than a perfectly competitive firm.

• more economic profit than a monopoly.

• more economic profit than an oligopolist.

• zero economic profit.

Which of the following best characterizes the firms in an oligopoly industry?

• Firms can easily enter the industry when profits are high.

• There are more firms than in a monopolistically competitive industry.

• They are independent.

• They always collude to increase profits.

• They use strategic decision making.

What is the Nash Equilibrium?

• Both fast-food restaurants should choose to concentrate on fries.

• Both fast-food restaurants should choose to concentrate on burgers.

• Brewer’s should choose to concentrate on fries, and Royal’s should choose to concentrate on burgers.

• Brewer’s should choose to concentrate on burgers, and Royal’s should choose to concentrate on fries.

• There is no Nash Equilibrium

Total revenue is maximized where:

• MR = 0

• MR = MC

• TP = peak

• P = ATC

• P = MC

The profit maximizing price and quantity are:

• Q1; P6

• Q2; P5

• Q3; P4

• Q4; P3

• Q5; P2

A profit maximizing monopoly will maximize profit where:

• MR = MC

• MR = ATC

• MR = min ATC

• P = ATC

• P = MC