1 29) A major distinction between a monopolistically competitive firm and an oligopolisticfirm is thatA) one is a price taker and the other is a price maker.B) a recognized interdependence exists between firms in one industry but not irthe other.C) one always produces differentiated products and the other always produces :homogeneous product.D) one necessarily faces a downward-sloping demand curve and the other ahorizontal demand curve.30) The following table is for a purely competitive market for resources.Number ofTotal ProductProduct PriceWorkers$311626334440344How many more workers will the firm hire when the wage rate is $15 instead of $30?A) 1 workerB) 2 workersC) 3 workersD) 4 workers31) If oligopolistic firms facing similar cost and demand conditions successfully collude,price and output results in this industry will be most accurately predicted by which of thfollowing models?A) the kinked demand curve model of oligopolyB) the price-leadership model of oligopolyC) the pure monopoly modelD) the monopolistic competition model

Introduction A monopolistically competitive is a market structure in which a large number of firms…

29) A major distinction between a monopolistically competitive firm and an oligopolistic firm is that A) one is a price taker and the other is a price maker. B) a recognized interdependence exists between firms in one industry but not ir the other. C) one always produces differentiated products and the other always produces : homogeneous product. D) one necessarily faces a downward-sloping demand curve and the other a horizontal demand curve.

29) A major distinction between a monopolistically competitive firm and an oligopolistic firm is that A) one is a price taker and the other is a price maker. B) a recognized interdependence exists between firms in one industry but not ir the other. C) one always produces differentiated products and the other always produces : homogeneous product. D) one necessarily faces a downward-sloping demand curve and the other a horizontal demand curve.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.2P

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Make a case for why monopolistically competitive industries never reach long-run equilibrium.
Explain the general meaning of the profit payoff matrix below for oligopolists X and Y. All profit figures are in thousands. a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries. b. Assuming no collusion between X and Y, what is the likely pricing outcome? c. In view of your answer to 3b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement?
Q9. A fundamental feature of a monopolistic market is that the firm ________. * a) can sell any quantity it desires at the current market price b) can obtain any price for any quantity of output c) faces a perfectly inelastic demand curve d) faces the price and quantity trade-off dictated by market demand Q2. Which of the followings is an appropriate statement about the "limit pricing" strategy"? * a) The strategy is most effective in a perfectly competitive market. b) Goods and services are sold by suppliers at a price higher than the short-term profit maximizing level. c) The main purpose of the strategy is to protect the existing firm's long-run profits from damage by competition. d) The main purpose of the strategy is to charge each customer the maximum price he or she is prepared to pay for the product. Q3. Which of the followings is an example of second degree price discrimination? * a) Ladies' night in a bar b) Half-price tickets for kids in the cinema…
Compare the elasticity of the monopolistic competitor’s demand with that of a pure competitor and a pure monopolist. Assuming identical long-run costs, compare graphically the prices and outputs that would result in the long run under pure competition and under monopolistic competition. Contrast the two market structures in terms of productive and allocative effifi ciency. Explain: “Monopolistically competitive industries are characterized by too many firms, each of which produces too little.”
18. Refer to Figure 18-1. If the shop charges $150 per repair, then what is the value of the marginal product of the second mechanic? 19. Refer to Figure 18-1. What is the marginal product of the third mechanic? 20. Why are the actions of firms interdependent in an oligopoly market but not in a monopolistically competitive market?
(b) Consider two firms, 1 and 2 , operating in a monopolistic competitive market. The cost functions of the firms are: TC_(1)=20+20 Q and TC_(2)=80+80Q, respectively. Would it be rational for both firms to compete in the world market, given the market demand curve of Q=100-P, and they have to bear a trade cost of $30 per unit? Explain with the help of a diagram. please give answer with compleete steps and diagram.