Question

A tax increase can be shared by the buyer and the seller of a good. a.true b.false

The pricing of products in the oligopoly market is unlike the pricing in the monopolistically competitive market. a.true b.false

Markets allow people to exchange goods and services. a.true b.false

There is only one theory that explains oligopoly. a.true b.false

The monopolist’s two major constraints are related to ________ and _________.

a.	profit; loss	b.	cost; demand
c.	number; closeness of substitutes	d.	price; quantity

Demand suddenly rises in the perfectly competitive strawberry market. Most likely, result would be which of the following?

a.	A short-run price rise, followed by larger long-run price hikes as the stock of strawberries is depleted.	b.	Lower short-run prices because of higher sales, but higher prices in the long run as the stock of strawberries is depleted.
c.	Higher prices in the short run, followed by an increase in production in the long run which would cause prices to decline somewhat.	d.	Higher short-run prices because of greater sales volume, and even higher prices later on, as farm sizes are adjusted.

Answer 1

1. (a) true

2. (b) false. In oligopoly one producers sets the price and other follows it and if one of them reduces the price it leads to fall in the price in the market due to competition while in monopoly its the price maker.

3. (b) false. exchange goods and services is a barter system.

4. (b) false.

5 (d) price; quantity

(c), Higher prices in the short run, followed by an increase in production in the long run which would cause prices to decline somewhat.