Question

Which of the following options best describes market structures from the lowest to the highest degree of market power?

Perfect competition, monopolistic competition, oligopoly, monopoly

Oligopoly, monopoly, monopolistic competition, perfect competition

Monopoly, perfect competition, oligopoly, monopolistic competition

Monopolistic competition, oligopoly, monopoly, perfect competition

A cable company has determined that the marginal revenue from an additional subscriber is $15, and the marginal cost of providing cable services is $5. Based on this information, what should the company do?

Increase the quantity of cable services provided

Decrease the quantity of cable services provided

Keep the quantity of cable services provided constant

Suppose a perfectly competitive firm experiences an increase in wages paid to labor in the short run. In the short run, if the firm follows the profit-maximizing rule, which of the following may you conclude?

That variable, total, and marginal costs rise; output falls and profits fall

That variable and total costs rise; output is unchanged and profits fall

That variable and total costs rise; output and profits are unchanged

That variable, total, and marginal costs rise; output falls; and profits are unchanged

Consider a perfectly competitive firm in the short run that is making a profit while producing 150 units of output at a marginal cost of $10 and a total revenue of $3,000. Which of the following best describes the firm's actions or options?

The firm is maximizing profits.

The firm could increase profits by decreasing output.

The firm could increase profits by increasing output.

The firm should shut down production.

The demand curve of a perfectly competitive firm could be more or less elastic than the demand curve of a firm with monopoy power depending on the level of output produced.

True

False

Suppose an identical good is sold in three markets that are isolated from each other. In Market A, there are many sellers of the good. In Market B, there are two sellers; these sellers are not allowed to communicate about their price and quantity until they actually offer the good for sale. In Market C, there is only one seller. All of the sellers have identical cost schedules. From lowest to highest, order the markets in terms of the quantity of good that they sell in the market.

Market B, Market A, Market C

Market A, Market C, Market B

Market C, Market B, Market A

Market A, Market B, Market C

Which of the following is most likely to occur if the price in a perfectly competitive market is above a firm's average variable cost, but below its average cost?

The firm will continue operating in the shortrun, but it will exit the industry in the long run.

The firm should shut down immediately and exit the industry.

The firm should continue operating in the shortrun and the longrun.

The firm should shut down now, and reopen when conditions change.

Based on your reading, which market structure is most applicable for the market for building commercial aircraft when there are two major manufacturers of commercial airplanes and little possibility of entry by new firms.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the domestic market for heating oil when there are many resellers of heating oil and it is a homogeneous product.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the market for generic aspirin which is a homogeneous product, made by many different firms.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the market for over-the-counter painkillers? There are many firms in this industry, and the products are differentiated.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the market for soybeans? This product is homogeneous and produced by many different farmers. There is free entry, and the product is traded in a commodities market.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the market for commercial diamonds in the 1970s? Mining, polishing, and distributing diamonds is controlled by a single company, and that company sets the quantity and price for the majority of diamonds available in the market.

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Based on your reading, which market structure is most applicable for the international market for crude oil? There are several producers of oil, which is a fairly homogeneous product. However, there is no possibility of entry and several producers have formed a cartel, the Organization of Petroleum Exporting Countries (OPEC).

Perfect competition

Monopoly

Oligopoly

Monopolistic competition

Which of the following reflects the way a monopoly firm chooses a price and output?

Price equals marginal cost

Marginal revenue equals marginal cost

The greatest difference between marginal revenue and marginal cost

Minimize average cost

Answer 1

1 : Option B is correct. The higher to the lowest level of market structure i.e oligopoly, monopoly, monopolistic competition and perfect competition . The higher is the market power in an oligopoly firm and lowest in the perfect competition.

2 : Option C is correct. As MR= MC so the firm should remain the quantity at fixed point of cable service providers.

3 . Option B is correct. As variable cost and total cost has been increased and output has been remain unchanged and profit has been decreased.

4. Option C is correct., the firm marginal cost is lower than marginal revenue so that they can increase the production of an output level in an economy.

5 . The statement is false. As demand curve is horizontal line where as in monopoly they have inelastic or elastic.

6. Option D is correct. lowest to highest output level are Market A, Market B and Market C. From lower to higher level of an output level.

7 : Option A is correct. The firm should continue to operate in short run but it has been shut down in the long run time period.

8 : Option C is correct. Oligopoly market structure is most applicable one and they are combined in the commercial aircraft business

9 : Option A is correct. perfect competition is a market structure is most applicable for domestic market for heating oil .

10 : Option D is correct. Monopolistic competition has been arises where there are many painkillers available with them.

11 . Option B is correct. Monopoly is a market structure where diamond mining has been utilised.

12 : Option C is correct. Oligopoly is a market structure where larger number of buyer and seller selling identical product.

13 : Option A is correct. price = MC is the method which monopoly choose it price and output.