Question

42. Suppose a market has only one seller and only one buyer of a good in the market. The buyer is willing to pay $50 for the good and the seller is willing to accept $15. The market price of the good is determined at $30. If they trade, the social surplus will be ____ A) $15 B) $35 C) $45 D) $65 15. There are 5 ship manufacturers in Polonia and each firm faces a downward sloping demand curve. The ship-building industry in Polonia is an example of a(n)- A) perfect competition B) duopoly c) monopoly D) oligopoly 45. In comparison to firms in other market structures, monopolists: A) maximize social surplus. B) encourage the entry and exit of new firms. C) set price lower than marginal revenue. D) produce goods that do not have close substitutes.

Answer 1

Answer 42) Option B

Consumer surplus = Willingness to pay - market price => 50- 30 = $20

Producer surplus = Market price - willingness to accept => 30 - 15 = $15

Total surplus = 15 + 20 = $35

Answer 15) OptionD

Oligopoly is a market structure in which there are more than 2 firms in the market.

In perfect competition, there are many firms.

In a monopoly, there is1 firm and in a duopoly, there are 2 firms in the market.

Answer 45.) Option D

A monopolist produces the goods which are rarely available in the market and this is the reason that a producer gets the monopoly in the market.

Answer 47) Option A

The marginal revenue is the additional revenue receive by selling an extra unit of a good.

As we know that the demand curve of a monopolist is downward sloping and so is the marginal revenue curve which means that decreasing the price leads to the decrease in the marginal revenue