B220 MI11 Leo Quiz

The taxi industry in Singapore is run by CityCab, Comfort Taxi, Premier Taxi, SMRT etc. If Comfort Taxi decreases its midnight surcharge, how will the other taxi companies likely react?

• The other taxi companies will boycott the industry which will lead to Comfort Taxi monopolizing the taxi industry

• The other taxi companies will also lower their midnight surcharge fees so as to remain competitive

• The other taxi companies will not lower their midnight surcharge fees as their market shares will not be affected

• The other taxi companies will take the opportunity to increase their midnight surcharges

Which one of the following statements about monopolistic competition is FALSE?

• Monopolistic competition consists of a few large firms

• Monopolistically competitive firms can compete based on product differentiation

• Monopolistic competition leads to a steeper firm’s demand curve than perfect competition

• Monopolistically competitive firms earn normal profit in the long run

Jane has just set up a flower boutique business in a new housing estate, which is enjoying high volume of customers and good business. Why should Jane not assume that the current profits will continue?

• The firm is a monopoly which will attract government regulation

• Current economic profits will be eliminated by the entry of competitors

• While economic profits are positive, accounting profits may be negative

• None of the options

Which of the following characteristics is a unique feature of the oligopoly which is not present in the other market structures?

• Differentiated products

• Homogenous products

• Interdependence of firms

• High barriers to entry or exit

In which of the following examples would you most likely find monopolistic competitive behaviour?

• Bakeries

• Oil and Gas

• Airline industry

• Cable television services

In an oligopolistic market, what is the danger that can arise if the firms collude?

• Firms collude to set both price and output, resulting in equilibrium price and output levels that do not benefit consumers

• Firms collude to set output only, resulting in equilibrium output levels that benefit consumers

• Firms collude to set prices only, resulting in equilibrium price levels that do not benefit consumers

• Firms collude to set price and output, resulting in equilibrium prices and output levels that benefit consumers

Compared to perfect competition, firms in monopolistic competition produce _____________________ due to presence of barriers to entry

• Less output at a lower price

• Less output at a higher price

• More output at a lower price

• More output at a higher price