Eco 561 Week 3 Quiz Essay

4408 WordsApr 16, 201318 Pages
ECO561 Week 3 …FREE…Quiz with Answers… ** I see a lot of views , but no comments : ( Roguephoenix FaceB**K PLEASE COMMENT TO LET ME KNOW THAT THIS IS HELPING MY FELLOW PHOENIX. 1. A purely- or perfectly-competitive firm would be characterized by which of the following? Hint : The different types of firms include pure competition, pure monopoly, monopolistic competition, and oligopoly. A. Large number of firms, price taker, free entry and exit, and standardized product B. Large number of firms, price maker, free entry and exit, and a differentiated product C. Small number of firms, price maker, limited entry and exit, and a standardized product D. One firm, price maker, limited entry and exit, and a…show more content…
6. In a monopolistic competition industry, if one firm appreciably increased its price from the existing equilibrium price, which of the following outcomes would most likely ensue? Hint : Typically, in a monopolistic competition industry, if one company increases price, the other company also increases their price to make more revenue in the long term. A. It would likely suffer a significant decrease in its market share, because its competitors would be unlikely to deviate from the established equilibrium price. B. The firm would stand to gain much additional revenue if its competitors did not follow suit by raising their prices. C. Any gain or loss in the firm's revenue from increasing its price would depend on the price elasticity of demand: The more elastic the demand, the higher the revenue potential from a price increase. D. It would probably see no change in its revenue position as its competitors would raise their prices accordingly. In a monopolistically competitive industry, the goods sold, while not perfect substitutes, can be viewed as acceptable substitutes by most people. As a result, if Firm A raised the price of its good substantially, consumers would decrease the quantity demanded from Firm A and would move to other firms selling similar products. As a result, Firm A would sell few units at the new higher price. As the quantity a firm sells falls, so does its percentage of sales in the industry, also

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