Question

D. Normal E. Price makers L. Spapheni sacet has mary produsers a bgprodact thus hecir prodact is a a market structure 2 Patents and oopyrights allow the inventorioreator of a peoduct o cion aa there are many buyers and sles it is asy to enser or exit the indutry and the 3. In (1) The fim PG&E is considered a (3) 4. s The different rates charged for electricity and pas is a foem or Saawberry stands are Prodessor Serpa's esample of a firm ) 7Sarawberry stands charge the same price for strawberries becnse dhey ane comsidered) The market for rock salt isah mogenous product market structure thng ม"-peodoon. sorsproduced "' 9. and can suitain an econoemic peotit 10. A monopoly and colluding oligopolies are (2) market 11. Most firms making agriculture products are in a () 2Ifa firm, in the long run, has a profit equal to zero, and also functions at he minismum of the ATC be in a (1) market as a result of not producing the 13 Both monopolies and fims in monopolistic competition have (2 socially optimal amount 14 Senior discounts and children's menus are an examplc of ( there is a small amoust of DWL, however, cconomists agree that product variety 15. In (1) counterbalances the DWL firms in the long-run have profits equal to zero, but also have some DWL which is a result 16. In (1). of excess capacity 17. A() can sustain an cconomic profit in the long run 18. In the long run, finms in (1) producer and consumer surplus (thus there is no DWL) produce at the minimum of their ATC curves and maximize with a standardized product 19. The market for aluminum is an example of an(1) is an agreement among fiems in a market about quantities to produce, or prices to charge 20. (2)

Answer 1

Solution:

The answers are simply based on definitions of terms and basic characteristics of market structure. Thus, I would answer all the blanks directly.

1. It talks about market structure with many producers selling differentiated products, thus marking a feature of monopolistic competition. So, spaghetti sauce has many producers that compete by differentiating their product, thus their product is in a monopolistic competition market structure.

2. Patents and copyrights save a product or service used by one firms to be used by some other firm. So, this is like a single seller in a market. So, patents and copyrights allow the creator of a product to function as a monopoly.

3. Again, a market structure with many buyers and sellers, but now goods are homogeneous and not differentiated, marking a feature of perfectly competitive market structure. Thus, in perfect competition, there are many buyers and sellers, it is easy to enter or exit the industry and the product is homogeneous.

4. PG&E provides energy in it's area. Moreover, it is the only firm engaged in such service, thus, with single firm entity, we can say that PG&E is considered a monopoly.

5. When for same product or service, different prices are charged from different people, or different prices are charged from same people, at different times depending on the demand of that good, we say there exists price discrimination. Thus, different rates charged for electricity and gas is a form of price discrimination.

6. Strawberry stands, as name itself suggests, must exist in perfect competition environment as strawberry is same for all, it's a homogeneous good which can engage many vendors. Strawberry stands are an example of firm in perfect competition.

7. When same price is charged by all sellers, that means they do not have much power on deciding or manipulating the prices. This is one of the main characteristic of perfect competition market structure, where firms act as price takers. Thus, strawberry stands are considered a price taker.

8. In economics, breakeven level that is earning 0 profit is simply considered as earning normal profit for any market structure.

9. As already answered the similar question, market with homogeneous product and many sellers/producers is perfect competition market structure.

10. A monopoly and colluding oligopolies have the power in the market and they can use this power to influence prices. In this sense, they are price makers and can sustain an economic profit.

11. Most firms making agricultural products, that is mostly, agriculture markets are in perfect competition.

12. In the long run, firms under monopolistic competition earn 0 profit, while operating at the efficient scale of production, that is at the minimum of ATC curve.

13. Whenever production takes place at the socially optimal level, maximum surplus is generated. So, under monopoly and monopolistic competition, since production takes place at below socially optimal amount, dead weight loss (DWL) is generated.

14. Seniors discounts and children menus, both aim at charging different price (lower price) from different age groups, thus this difference in price charged for same product is clearly an example of price discrimination