Question

1. A cartel is

a. Not illegal in the United States.

b. An organization intended to increase competition in an industry.

c. A public agreement between firms or countries to restrict production and raise prices.

d. A type of market structure.

2. A monopoly

a. Produces less output than a competitive industry, ceteris paribus.

b. Charges the same price as a competitive industry, ceteris paribus.

c. Maximizes profits at the output where P = MR

d. Maximizes profits at the output level where MR > MC

3. In monopolistic competition, a firm

a. Has a downward-sloping demand curve.

b. Has no market power

c. Captures significant economies of scale.

d. Has a standardized product that all firms produce.

4. Marginal cost pricing results in the most desirable mix of goods and services from the consumer's standpoint because

a. Prices are forced down to the lowest possible level

b. Firms are forced to produce at the most technically efficient output level.

c. Economic profits are zero.

d. The prices consumers pay are a reflection of the value of the goods and services given up.

5.Perfectly competitive firms cannot individually affect market price because

a. The government exercises control over the market power of competitive firms.

b. The government exercises control over the market power of competitive firms.

c. Demand is perfectly inelastic for their goods

d. There is an infinite demand for their goods.

6. Which characteristic of competitive markets permits society to answer the WHAT to produce question efficiently?

a. Marginal cost pricing.

b. Minimum cost pricing

c. Average cost pricing.

d. Total cost pricing.

7. why monopolistic firms spend money on product differentiation and advertising when it only adds to costs?

8. Very briefly explain the Kinked Demand model of Oligopoly.

Answer 1

1. A cartel is a public agreement between firms or countries to restrict production and raise prices. Hence,option(C) is correct.

2. A monopoly produces less output than a competitive industry , ceteris paribus. Hence, option(A) is correct.

3. In Monopolistic competition , a firm has a downward sloping demand curve. Hence, option(A) is correct.

4. Marginal cost pricing results in the most desirable mix of goods and services from the consumer's standpoint because the prices consumers pay are a reflection of the value of the goods and services given up. Hence,option(D) is correct.

5. Perfectly competitive firms cannot individually affect market price because their individual production is insignificant relative to the production of the industry.

6. Marginal cost pricing is the characteristic of competitive market permits society to answer what to produce question efficiently. Hence,option(A) is correct.