QUESTION 34Monopolist competition and oligopoly are alike in thatOa the number of businesses is approximately the same in eachb. strong mutual interdependence exists among businesses in oachOc barriers to entry are significant to bothd.non-pnce competition is common to bothQUESTION 35If nominal GDP rises:O1.real GDP must also riseO2.real GDP must fall3. the price leel has fallen04. the price level has risen5.real GDP may either rise or fall QUESTION 30The price elasticity of demand indicatesOa the slope of the demand curveOb.how far business executives can stretch their fixed costsOc the extent to which consumers respond to a change in priceOd. the extent to which a demand curve shifts as income changesQUESTION 31A monopolistic competitor's marginal revenue curve:O a. coincides with the dermand curve and is parallel to the horizontal axisO b. is downward-sloping and coincides with the demand curveOt. is downward-sloping and lies above the demand curveCd. is downward-sloping and lies below the demand curve

QUESTION 34 Monopolist competition and oligopoly are alike in that Oa the number of businesses is approximately the same in each Ob. strong mutual interdependence exists among businesses in each Oc barriers to entry are significant to both d.non-price competition is common to both QUESTION 35 If nominal GDP rises: O1.real GDP must also rise O2.real GDP must fall O 3.the price level has fallen 4. the price level has risen O 5.real GDP may either rise or fall

QUESTION 34 Monopolist competition and oligopoly are alike in that Oa the number of businesses is approximately the same in each Ob. strong mutual interdependence exists among businesses in each Oc barriers to entry are significant to both d.non-price competition is common to both QUESTION 35 If nominal GDP rises: O1.real GDP must also rise O2.real GDP must fall O 3.the price level has fallen 4. the price level has risen O 5.real GDP may either rise or fall

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Characteristics of oligopoly An oligopolistic market structure is distinguished by several characteristics, one of which is either similar or identical products. Which of the following are other characteristics of this market structure? Check all that apply. O Difficult entry O Market control by a few large firms O Neither mutual interdependence nor mutual dependence O Mutual interdependence O Market control by many small firms
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(Figure: Market Demand Curve I) The graph shows the market demand curve. Price (S) 40 35 2 28 24 20 16 12 36 32- 8 4- D 8 9 10 Quantity The equilibrium price in a Cournot duopoly with identical goods is $ a.8. b. 12 c.24 O d. 18.64 0 MC=AC MR 1 2 3 4 5 6 7
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In the Cournot model the final level of output is the output that would be produced if the industry was a monopoly, and is the output that would be produced if the industry was perfectly competitive. O a. greater than; less than O b. greater than; equal to Oc. equal to; less than O d. less than; greater than In the Cournot model, when a new firm begins production it assumes its demand curve is O a. the market demand less the amount the other firm is selling. O b. the market demand plus the amount the other firm is selling. Oc. the same as the competing firm's demand curve. O d. one-half of the competing firm's demand curve.
Price $10 8 O 4 2 MR Supply Demand I 1 0 2 4 6 8 10 Quantity Refer to the figure above. If the market had been competitive but was taken over by a cartel, as depicted in the figure above, then we would expect output to increase from 5 to 10. increase from 3 to 6. decrease from 6 to 3. decrease from 5 to 2.
The graph below shows a duopolistic market. The firms in this market produce and sell identical products. The graph below shows the market demand, a corresponding marginal revenue curve for the product, and an identical marginal cost curve for each firm. Assume both firms have the goal of maximising economic profit. If the two firms were to collude, what would be the total economic profit made by each firm? O O O $24 $6 $16 $8 Price ($) 10 9 8 7 $0 6 5 4 3 2 1 0 0 Insufficient information to determine economic profit of each firm. 1 2 3 4 MR 5 6 7 8 9 MC D 10 Quantity
Conceptually, which statement applies only to a market under monopolistic competition and not to a market under a monopoly? O A firm operating in the market maximizes profits where marginal revenue equal to marginal cost O If economic profits are being made, new firms will enter the market O Firms face a downward-sloping demand curve O A firm operating in the market can make positive economic profits in the short run O None of the other answers (i.e., all of the other answers apply to both market structures)
6. Consider a duopoly in which inverse demand is given by P= 100-Q, where Pis the price and Q is aggregate output. The marginal cost of each firm is initially equal to 55 and there are no fixed costs. The firms compete by simultaneously setting quantities. (a) What is the equilibrium quantity of each firm, the equilibrium price and the profit of each firm? Now assume that one of the firms, firm 1, develops a new technology that reduces its own marginal cost to 25. (b) If firm 1 keeps this innovation for itself (so that the marginal cost of firm 2 is still 55), what will be the new equilibrium levels of output, price and profits of the two firms? What is the consumer surplus in the market? Do consumers benefit from the innovation?
Match each statement with the appropriate market structure: A. Oligopoly B. Monoplistic Competition C. Competitive Market D. Monopoly ? ✓ 1. A structure where many firms sell similar, but not identical products ? v 2. A market where a few large firms control the market ? 3. A market structure with many firms selling identical products ? ✓4. A market where only one firm is selling a product