Question

Choose The corrects Answers

P.S This is one question with subquestions

B)How are the market structures of Monopolistic Competition and Monopoly similar? (Select more than one)

a)They have the ability to sell items above marginal cost

b)They have market power

c)the products are differentiated

d) there are barriers to entry

C)Which oligopoly model best describes the airline industry, where 4 airlines provide 95% of flights, and all utilize the same planes, airports, and food vendors?

a)Kinked Demand

b)Stackelberg

c)Bertrand

d)Cournot

D)Which of the following are examples of product differentiation?

a)celebrity endorsement

b)extended warranties

c)a biodegradable bag

d)new potato chip flavors

Answer 1

(B).

a. They have market power.

Explaination:- like monopoly, monopolistic competitive firms can also maximize it's profit by producing at the level where MC equals to MR. So, monopolistic competition firms also have market power.

(C).

a. Kinked demand curve

Explaination:- It occurs when demand curve is not the straight line but have different Elasticity when price is higher and lower.

Increase in price of one will make it costlier than other 3 airline thus change it's Elasticity to a level.

(D).

a. Celebrity endorsement

Explaination:- celebrity endorsement is an example of product differentiation as it will differentiate the product from other firm's similar product as well as firm's own similar product.