Which is most characteristic of a pure monopoly?
A. There is a dominant firm in a multifirm industry.
B. Exit from the industry is blocked but entry into the industry is relatively easy.
C. The firm produces a good or a service for which there are no close substitutes.
D. The firm has considerable control over the quantity of the output produced, but not over price.
Answer: C
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Which of the following is not correct about most economic models?
a. They are composed of equations and diagrams. b. They contribute very little to economists' understanding of the real world. c. They omit many features of the real-world economy. d. In constructing models, economists make assumptions.
The key behavioral assumption of the cartel theory is that oligopolists in an industry
A) try to maximize sales instead of profits. B) act as if they are perfect competitors. C) act in a manner consistent with there being only one firm in the industry. D) try to create a demand for their products by way of advertising. E) none of the above
To be able to engage in profit-maximizing price searching, a monopoly firm must be able to
A) prevent the entry of other firms into the market for its product. B) induce the entry of other firms into the market for its product. C) avoid earning negative economic profits in the short run. D) always earn zero economic profits.
Cross-price elasticity of demand measures the response in the
A. price of a good to a change in the quantity of another good demanded. B. quantity of one good demanded when the quantity demanded of another good changes. C. quantity of one good demanded to a change in the price of another good. D. income of consumers to the change in the price of goods.