Question

1.

Which of the following industry types typically has a FEW large producers?

	A.	Pure competition
	B.	Monopolistic competition
	C.	Oligopoly
	D.	Pure monopoly

2.

	A.	Pure competition
	B.	Oligopoly
	C.	Pure monopoly

3. If you were a manager of a business selling RESTAURANT MEALS, what would happen to your GROSS REVENUES if you LOWERED the price of this product per meal?

	A.	Gross revenues would DECREASE if you lowered the price of each meal
	B.	Gross revenues would REMAIN THE SAME if you lowered the price of each meal
	C.	Gross revenues would INCREASE if you lowered the price of each meal

4.

How is demand for INFERIOR goods (like generic macaroni and cheese) affected by a DECREASE IN INCOME (as is the case when the economy experiences a severe recession)? In a recession, the demand for generic macaroni & cheese

	A.	Decreases
	B.	Is NOT affected
	C.	Increases

Answer 1

1) In an Oligopoly market only two or three firms control the market and usually they sell products with slight difference. On the other hand Monopoly market is a market where there is only a single producer who control the whole market. Also pure competition and monopolistic competition market consist of large number of producers.

Therefore the correct option C

2) No question available.

3) By reducing or lowering the price of the product per meal it will reduce the gross revenue as the selling price will be reduced so as the contribution margin and net profit. Here it is assumed that lowering the price of the product per meal will not increase the number of meal sold.

Therefore the correct option is A

4) Inferior goods are those goods whose demand will increase where there is a fall in income of the individual , generally during recession period the demand of such inferior goods rises . However at times of rising income the demand for such goods decreases as people move to better alternative quality goods.

Therefore the correct option is C