Question

1. If the monopsony firm is a single-wage firm, then to hire more workers, the firm _____.

a. must reduce wages

b. must pay the new workers more

c. must raise the wages of all workers

d. will not change any wage

2. The local tennis stadium has a fixed number of seats for spectators. The equilibrium price to attend games for the Men's Championship is $15 and for Women's Championship is $25. Which of the following is true?

a. Women's games must be more expensive to stage than men's games.

b. The demand to attend women's games must be greater than that to attend men's games.

c. The supply of men's games must be less elastic than the supply of women's games.

d. The demand to attend women's games must be less than that to attend men's games.

3. Oligopolies face constraints like other markets; however, the one difference is that oligopolies face _____.

a. a vertical demand curve

b. a horizontal demand curve

c. a positively sloped demand curve

d. reactions of rival firms

4. Two or more oligopoly firms that act jointly is called a _____.

a. joint oligopoly

b. concentration

c. cartel

d. collision

5. Compared to a perfectly competitive industry with similar costs and demand, the single-price monopoly will produce _______ and its deadweight loss will be _______.

a. more; greater

b. more; less

c. less; greater

d. less; less

Answer 1

Answer : 1) The correct option is c.

Because as monopsony has a single wage power and want to increase the labour input level then this increase the labour market demand which lead to raise the wage level and monopsony firm always pay the same wage rate to all workers. This means if monopsony firm want to employ more workers then the firm increase the wage rate for all workers.

2) The correct option is a.

As number of seats are fixed and the attending price of men's championship is lower than the women's championship, then this means that the women's game is more expensive than the men's game in stage.

3) The correct option is d.

Because in oligopoly market no firm can ignore the reaction of rival firms. For example , if a firm reduce the price level then the rival firm will reduce more the price level to increase the market demand.

4) The correct option is d.

By collusion the oligopoly firms agree to not compete with each other in some cases by which all firms in oligopoly market makes more profit.