Market Structures and Pricing Strategies

Which of the following is a defining feature of monopolistic competition?

• Few firms selling identical products

• A single firm dominating the market

• Many firms with slightly differentiated products

• Perfect information among buyers and sellers

What type of market structure is characterized by free entry and exit and firms earning zero economic profits in the long run?

• Monopoly

• Perfect competition

• Monopolistic competition

• Oligopoly

In the short run, a firm in a competitive market will continue to produce as long as:

• Price is higher than average variable cost

• Marginal cost equals average total cost

• Total revenue equals total cost

• Price is lower than average fixed cost

A monopolist maximizes profit by producing at a quantity where:

• Average revenue equals marginal revenue

• Marginal revenue equals marginal cost

• Price equals average total cost

• Average variable cost equals marginal cost

Which pricing strategy involves charging different prices to different consumer groups based on their price sensitivity?

• First-degree price discrimination

• Second-degree price discrimination

• Third-degree price discrimination

• Bundling

What happens to economic profits in a monopolistically competitive market in the long run?

• Firms earn positive economic profits

• Firms earn zero economic profits

• Firms incur economic losses

• Firms merge into an oligopoly

If a monopolist faces a demand curve P=50−2Q and its marginal cost is constant at 10Php, what is its profit-maximizing price?

• 20Php

• 30Php

• 35Php

• 25Php

A firm practicing second-degree price discrimination charges:

• A unique price for each consumer

• Different prices for different quantities purchased

• A single price for all units sold

• Prices based on time of purchase

What is the goal of implementing peak-load pricing?

• To minimize marginal cost

• To equalize prices across peak and off-peak hours

• To charge higher prices during periods of high demand

• To increase supply during peak hours

In a Cournot oligopoly, what is the most likely effect of increasing the number of firms?

• Market prices decrease

• Market output decreases

• Marginal costs increase

• Firms earn higher profits