Competitive markets

The greater the competition in market, the greater the profit

• True

• False

• Neither

The non-price determinants of market supply include the following;

• Costs of factors of production

• Marketing

• Competitive supply

• The number of firms

• Access to natural resources

Use the following statements to answer this question:

I. Markets that have only a few sellers cannot be highly competitive.

II. Markets with many sellers are always perfectly competitive.

• I and II are true.

• I is true and II is false.

• II is true and I is false.

• I and II are false.

Several years ago, Alcoa was effectively the sole seller of aluminum because the firm owned nearly all of the aluminum ore reserves in the world. This market was not perfectly competitive because this situation violated the:

• A) price-taking assumption.

• B) homogeneous product assumption.

• C) free entry assumption.

• D) A and B are correct.

• E) A and C are correct.

Imposition of an output tax on all firms in a competitive industry will result in:

• a downward shift in each firm's average cost curve.

• a leftward shift in the market supply curve.

• the entry of new firms into the industry.

• higher profits for the industry as price rises.

The idea of perfect competition is describes as which of the following?

• A market structure in which consumers and sellers respond to regulations imposed upon the market

• An ideal market structure in which consumers and sellers producers each compete directly and fully under the laws of supply and demand

• A market structure in which a few large firms control the means of production

• A market in which a single firm controls the competition, sets prices, and owns all means of production.

Which of the following explains why products must be identical in a Perfect Competition market?

• So that consumers are comparing "apples to apples," and decisions are made on price only

• So that producers can make better decision on price

• So that consumers are not confused by the many options available

Due to the corona crisis, demand for toilet paper increased tremendously. This caused...

• a shift of the supply curve to the right

• a shift along the demand curve towards equilibrium price

• a shift along the supply curve towards equilibrium price

• a shift of the demand curve to the right

The demand curve shifts to the right.

As a consequence the price...

• stays the same

• increases

• supply curve shifts to the right

• decreases

Which of the following costs may provide barriers to entry in a market?

• A) High research and development expenditures

• B) License fees

• C) Sunk costs associated with specialized facilities

• D) A and C

• E) A, B and C