Question

10. Ford Motor Company falls into which market structure? 

a. perfect competition 

b. monopolistic competition 

c. pure oligopoly 

d. differentiated oligopoly e. monopoly

11. The existence of price discrimination in a market is evidence of which of the following? 

a. The market is NOT a perfectly competitive market. 

b. Firms in the industry will earn zero economic profit in the long-run. 

c. Most firms in the industry will go out of business soon. 

d. The government is over-regulating the market. 

12. Compared to a firm in perfect competition, the monopolistically competitive firm tends to 

a. produce less and charge a higher price 

b. produce less and charge a lower price 

c. produce more and charge a lower price 

d. produce more and charge a higher price 

e. produce the same quantity

Answer 1

Question 10

Ford Motor Company is part of automobile sector.

Automobile sector has few companies and each company sells differentiated product.

A market with few sellers with each selling a differentiated product is referred to as differentiated oligopoly.

Hence, the correct answer is the option (d).

Question 11

Price discrimination implies charging different prices for same product.

This also indicate that firm has market power to determine price.

It is only in case of perfect competition that a firm has no power to determine price. It has to accept the market price.

Thus,

The existence of price discrimination implies that the market is not a perfectly competitive market.

Hence, the correct answer is the option (a).

Question 12

The monopolistically competitive firm tends to have excess capacity.

This implies that, in comparison to perfect competition, the monopolistically competitive firm tends to produce less and charge a higher price.

Hence, the correct answer is the option (a).

Answer 2

ANSWER :

10.

Option d.

11.

Option a.

12.

Option a.