U4 P2 M64: Understanding Check

Class Pd

• Pd 2
• Pd 4
• Pd 6
• Pd 8

Your 1st name

Your last name

1a)

• increase
• decrease

1b) The firm has a cost advantage over its rivals

• increase
• decrease

1c) The firm's customers face additional costs when they switch from one firm's product to another firm's product.

• increase
• decrease

1d) The firm and its rivals are currently operating at maximum production capacity, which cannot be altered in the short run

• increase
• decrease

2) 2 Industries both have 7 major firms. The % of sales for the top 4 firms in each industry is as follows: Industry A: 40%, 20%, 10%, 3% Industry B: 30%, 20%, 18%, 10% Which industry has the greater chance of acting as an oligopoly and why

• A because the largest firm has a 40% market share
• B because there is only a 20% differenc ein market share from the largest to the smallest firm
• B because it has a higher 4 firm concentration than A
• A because it has a higher 4 firm concentration than B

3) If a firm wants to sell 5 units of an item, it must sell them at a price of $10. To sell 1 more unit, the firm would have to sell them at a price of $9. The quantity effect of the new price is

• 1
• $10
• $9

4) If a firm wants to sell 5 units of an item, it must sell them at a price of $10. To sell 1 more unit, the firm would have to sell them at a price of $9. The price effect of the new price is

• 1
• $10
• - $5