How is monopoly different from perfect competition?
A.In a monopoly, there is only one seller, who can set prices as he chooses. In perfect competition,firms have some control over prices, but not as much as monopoly..
B.In a monopoly, there is only one seller, who can set prices as he chooses. In perfect competition,firms are price takers.
C.In a monopoly, there is more than one seller, but they can set prices as they choose.In perfect competition, firms are price makers.
D.In a monopoly, they are always protected by government barriers, whereas in a perfectively competitivecompany, they have no such protection.
Answer is B. In a monopoly, there is only one seller, who can set prices as he chooses. In perfect competition (also called perfect market conditions) a firm is a price taker because other firms can enter the market easily and produce a product that is indistinguishable from every other firm's product. This makes it impossible for any firm to set its own prices.
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Refer to the following graphs.
Which of the graphs correctly labels the axes of the AS-AD model?
A. Graph (1) B. Graph (2) C. Graph (3) D. Graph (4)
The more firms there are in an oligopoly in which the strategic firm variable is quantity, the more price converges to marginal cost.
Answer the following statement true (T) or false (F)
Refer to Exhibit 6-2. The unemployment rate in year 1 is
a. 12 1/2 percent. b. 70 percent. c. 87 1/2 percent. d. 30 percent. e. 10 percent.
In the absence of externalities, which of the following is true of economic efficiency?
a. It occurs where marginal costs of production equal marginal benefits of consumption. b. It occurs where quantity supplied is equal to quantity demanded. c. It maximizes the total net benefits to consumers and producers. d. All of the above. e. None of the above.