2. A: What are the basic assumptions associated with a perfectly competitive market? B: What...
2.
A: What are the basic assumptions associated with a perfectly
competitive market?
B: What are the basic assumptions
associated with a pure monopoly market?
C: For a given level of demand,
which market would have the lower price?
D: for a given level of demand,
which market would have the higher level of output?
Homework Answers
Answer 2A - assumption associated with perfect competitive market are
1) Large number of buyer and seller.
2) Homogeneous product.
3) Free entry and exit of firm.
4) Firms are price taker.
Answer 2B - assumption associated with a pure monopoly market are
1) Single seller and large number of buyer.
2) No close substitutes.
3) Restriction of entry of new firm.
4) Price maker.
Answer 2C - In perfect competitive market the price of a product at a certain level of demand would be lower because there are large number of firms in the market and all the firms are producing homogenous or similar products and buyers will buy from a firm which has lowest price possible, thus the firms will try to reduce its price as low as possible to run the firm.
Answer 2C - Foragiven level of demand output would be higher in monopoly as there is only one seller of that product and consumer had to buy from that firm only thus a monopoly firm would have a higher output to fulfill the demand of all the consumers.
Add Answer to:
2.
A: What are the basic assumptions associated with a perfectly
competitive market?
B: What...
A: What are the basic assumptions associated with a perfectly competitive market? B: What are the...
A: What are the basic assumptions associated with a perfectly competitive market? B: What are the basic assumptions associated with a pure monopoly market? C: For a given level of demand, which market would have the lower price? D: for a given level of demand, which market would have the higher level of output? 2) A: What are the differences between horizontal, vertical and conglomerate mergers? B: What is predatory pricing? C: What is limit pricing and who do economists...
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