tut9

The two types of imperfectly competitive markets are:

• monopoly and monopolistic competition.

• monopoly and oligopoly.

• monopolistic competition and oligopoly.

• monopolistic competition and cartels.

Imperfectly competitive firms are characterized by:

• horizontal demand curves.

• standardized products.

• a large number of small firms.

• price making ability.

One characteristic of an oligopoly market structure is:

• firms in the industry are typically characterized by very diverse product lines.

• firms in the industry have some degree of market power.

• products typically sell at a price equal to their marginal cost of production.

• the actions of one seller have no impact on the profitability of other sellers.

Which of the following industries has the highest concentration ratio?

• wheat

• novels

• cigarettes

• dog food

Which of the following statements is correct?

• Monopolistic competition is similar to monopoly because both market structures are characterized by patents.

• Monopolistic competition is similar to perfect competition because both market structures are characterized by each seller being small compared to the market.

• Monopolistic competition is similar to oligopoly because both market structures are characterized by free entry.

• Monopolistic competition is similar to perfect competition because both market structures are characterized by excess capacity.

A similarity between monopoly and monopolistic competition is that in both market structures:

• strategic interactions among sellers are important.

• there are a small number of sellers.

• sellers are price makers rather than price takers.

• there are only a few buyers but many sellers.

Because monopolistically competitive firms produce differentiated products, each firm:

• faces a demand curve that is horizontal.

• faces a demand curve that is vertical.

• has no control over product price.

• has some control over product price.

When a monopolistically competitive firm raises its price,

• quantity demanded falls to zero.

• quantity demanded declines but not to zero.

• the market supply curve shifts outward.

• quantity demanded remains constant.

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?

• P > ATC

• P = ATC

• P < ATC

• Any of the above could be correct.

A firm operating in a monopolistically competitive market can earn economic profits in:

• the short run but not in the long run.

• the long run but not in the short run.

• both the short run and the long run.

• neither the short run nor the long run.