IDENTIFYING MARKETS AND MARKET STRUCTURES

The cross elasticity of demand is the percentage change in demand for one good generated by a percentage change in price for another good

• TRUE

• FALSE

Mutual interdependence is a term economists use to describe any price change made by one firm in an oligopoly that affects the pricing behavior of other firms in the oligopoly

• TRUE

• FALSE

Firms in a market that is perfectly competitive produce goods that are perfect substitutes for each other

• TRUE

• FALSE

The most important characteristic that distinguishes one market structure from another is the size of the firms in the market

• TRUE

• FALSE

A firm in perfect competition is free to set price at whatever level it pleases

• TRUE

• FALSE

In monopoly, the firm is the industry

• TRUE

• FALSE

A monopolist’s demand curve will be horizontal at the market price.

• TRUE

• FALSE

The intended effects of advertising are to increase the market share for a firm and to make the demand for the product more elastic

• TRUE

• FALSE

Natural monopolies typically have high fixed costs, so only one firm is able to serve the market at a profit

• TRUE

• FALSE

Brand loyalty describes the willingness of consumers to buy a good at a higher price than the price of its close substitutes

• TRUE

• FALSE