Question

In: Economics

Which of the following is a characteristic of oligopoly but NOT perfect competition? a. Engages in...

Which of the following is a characteristic of oligopoly but NOT perfect competition?

a. Engages in advertising and sales promotion
b. Profit maximization according to the MR=MC rule
c. Firms are prtakers rather than price makers
d. Horizontal demand curve and marginal revenue curve

The Tragedy of the Commons occurs because

a. everyone deserves an equal share on government property.
b. social and private costs and benefits differ.
c. government property is most heavily used by the wealthy.
d. established property rights create competition.

A tariff is a tax place on

a. An imported good and it raises the domestic price of the good above the world price.
b. An exported good and it ensures that the domestic price of the good stays the same as the world price.
c. An imported good and it lowers the domestic price of the good below the world price.
d. An exported good and it lowers the domestic price of the good below the world price

Solutions

Expert Solution

All of the other options are the characterstics of the perfect competition, the oligopoly firms exensively use the advertisement and the sales promotion to gain the market power in the economy.

When the private costs are exceed the social costs there is negative externality and when the social cost exceed the private cost there is positive goods. The public goods are the non rival and non excludable in consumption so when the public uses the public property they are only concerned with the private cost and private benefit and not on the social cost and the social benefit.

A tariff is generally imposed on the imports of the country and the tariff makes an increase in the price of the imported good.


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