Question

Question 31

1. 31) Pure competition (of which perfect competition is a special case) is the only efficient market structure because:

   		a. society gets the amount of the good or service they want
   		b. society gets the good or service at the lowest possible price
   		c. firms are price makers
   		d. both (a) and (b).

3 points

Question 32

1. 32) In monopolistic competition:

   		a, all firms produce the same or a similiar good or service
   		b. society gets the amounts of the good or service they want
   		c. society gets the goods and services at the lowest possible price
   		d. none of the above

3 points

Question 33

1. 33) In a monopoly:

   		a. the firm reduces output below the competitive or pure competition output
   		b. the firm charges a higher price than the competitive or pure competition price
   		c. the firm increases its profits at the expense of buyers
   		d. all of the above

3 points

Question 34

1. 34) A successful oligopoly:

   		a. restricts total output in the industry to the monoploy output
   		b. charges the monopoly price
   		c. firms in the oligopoly share the monopoly profits (if any) based on their historical market share
   		d. all of the above

3 points

Question 35

1. 35) If a collusive agreement in an oligopoly brakes down and a price war develops:

   		a. it makes the market less efficient
   		b. there will be a winner
   		c. it is in a oligopolst's best interest
   		d. it will eventually end when one firm sticks its neck out and raises its price and the other firms follow

Answer 1

Answer: 31

d) both a and b.

Explanation:

: pure or perfect compitation is theoretical market structure inwhich all firms sell identical product( homogenious product). And all firms are price taker, they cannot influence the market price of product.

: this is the reason why sociesty get good and services as they want and at lowest price possible.

: option 'c' is not correct because firms in pure market not price maker insted they ae price taker. Market price has no influence on price.

Answer: 32

d) none of the above.

Explanation:

: In monopolist compitation, firms offer products that are similar but not perfect subsituters.

: All firms in monopolistic compitation have same relative low degree of market power, they all are price maker.

: these firm have little power to set curtail supply or raise price to increase price.

Answer: 33

b) the firm charges higher price than the compatative or pure compitation price.  

Explanation:

: compared to compatative market, monopoly charges higher price and produces more output, but makes less profit.

: the buyer monopoly gain come at the expemse of the sellers.

Answer: 34

c) firm in the monopoly share monopoly profit ( if any) based on their historical market share.

Explanation:

: option a is not correct because firm in oligopoly individually choose production to maximize profit, they produce a quqntity of output greater than the lecel produced by monopoly and less than level produced by competition.

: the oligopoly price is less than the monopoly price but greater than the competitive price.

Answer: 35

a) it makes market less efficient.

Explanation:

: price war can come at a high cost since it decreases a companies profit margin in short term.

: collusive could not be the best interest as there is always tension between cooperation and self intrest.

: price war straties can lead companies lowering price for product to add customers and cross sell them higher margin services.