Question

___________ is a market with substantial barriers to entry.

a.	Perfect competition	b.	Monopolistic competition
c.	Monopoly	d.	Oligopoly

______________ are firms that have market structures which sell homogenous products and differentiated products.

a.	Monopolistic competition	b.	Oligopoly
c.	Perfect competition	d.	Monopoly

Which of the following do neoclassical economists assume in all markets?

a.	Supply is the only key factor in the market.	b.	The selling price is determined by the individual seller.
c.	Firms will sell at the highest price possible.	d.	Firms will maximize profits.

Long-run equilibrium in the perfectly competitive market does not have which of the following?

a.	Other firms have an incentive to enter the market	b.	No incentive to reduce price
c.	No incentive to increase production	d.	No incentive to change the size of the current plant

Answer 1

Answer-1) Correct option is 'c'

Monopoly is a market with substantial barriers to entry. Monopoly market where there is a single seller of a product with no close substitutes. The significant barriers to entry such that new firms will find it very difficult or even impossible to enter the market.

2) Correct option is 'b'

Oligopoly are firms that have market structures which sell homogenous products and differentiated products. An oligopoly is an industry which is dominated by new firms.In this market there are few firm which sell homogeneous or differentiated products.

3) Correct option is 'd'

neoclassical economists assume in all markets that firms will maximize profits. Three central assumption of neo classical economics are:

a) People have rational preference between outcome that can be identified and associated with the value.

b) Individuals maximize utility and firm maximize profits.

c) People act independently on the basis of full and relevant information.

4) Correct option is 'a'

In long-run equilibrium in the perfectly competitive market does not have this statement ''other firms have an incentive to enter the market'' . In the long run, profit and losses are eliminated because an infinite number of firms are producing infinitely-divisible, homogeneous product.