Performance of Firms in Different Market Structures
105 questions· page 1 of 11
What would enable a firm to increase its market share in a monopolistically competitive market?
Options
A barriers to entry
B collusion
C lack of competition
D successful advertising
The diagram shows the costs and revenue for a monopoly.
Which level of output would produce only a normal profit?
Options
A output level A on Fig. 6.1
B output level B on Fig. 6.1
C output level C on Fig. 6.1
D output level D on Fig. 6.1
The diagram shows that a producer increases output from Q1 to Q2.
What will be the result?
Options
| total profit | total revenue | |
|---|---|---|
| A | increased | increased |
| B | increased | reduced |
| C | reduced | increased |
| D | reduced | reduced |
The diagram shows the effect of a demand curve shift from D1 to D2 for a profit maximising firm.
What has happened to the firm’s total revenue and the deadweight welfare loss?
Options
| total revenue | deadweight welfare loss | |
|---|---|---|
| A | decreases to OGLQ | decreases by KLN |
| B | decreases to OGLQ | increases by KLN |
| C | increases to OHKQ | decreases by KLN |
| D | increases to OHKQ | increases by KLN |
What will act as a barrier to collusion between firms?
Options
A an ability to detect price cuts by rivals
B the abolition of anti-trust measures
C the existence of a small number of firms in the industry
D unstable demand conditions for products
In which market structure is dynamic efficiency least likely to occur?
Options
A oligopoly
B monopolistic competition
C monopoly
D perfectly competitive
There are two firms in an industry. Firm X faces a choice. It can either act independently or work with its rival. If it acts independently its profit could be $900 a week but it could be only $400 a week depending on what its rival does. If it works with its rival the joint profit of the two firms together would be $1400, $700 each. It has no knowledge of what the rival's policy will be.
Which concept describes this situation?
Options
A contestable market
B kinked demand curve
C principal agent problem
D prisoner's dilemma
Which assumption is essential for a market to be contestable?
Options
A The market is supplied by a large number of firms.
B Firms are free to enter and leave the market.
C Firms cannot earn abnormal profits in the short run.
D Firms produce differentiated goods.
A market structure in which a small number of firms face competition from potential entrants.
What does this describe?
Options
A a contestable market
B a monopoly
C monopolistic competition
D perfect competition
Which assumption is essential for a market to be contestable?
Options
A The market is supplied by a large number of firms.
B Firms are free to enter and leave the market.
C Firms cannot earn abnormal profits in the short run.
D Firms produce differentiated goods.