Question

QUESTION 3 MC ATC Price (per unit) в с Market Price PEMR Quantity (units per week) Figure 23.6 Given the current market price, we expect to see Firms exit from the industry, driving up the market price. Firms exit from the industry, driving down the market price. No change in the number of firms in the industry and no change in the market price. Firms enter the industry, driving down the market price. Click Save and submit to save and submit. Click Save All Answers to save all answers.

Answer 1

3. Option ,Firms exit from the industry driving up the market price. [ The area of ABCD shows that the firms earn abnormal profits when firms exit from the industry]

4. Option , $150 [ (650 *11) - (700*10) = 7150 - 7000 =150]

5 . Option , lower its output [ Upto a point where MR = MC]

6. Option , tourists pay a higher price than locals do [ Price discrimination is selling the same service to different people at different prices. Tourists especially from foreign countries are expected to pay higher tariffs in resorts]

7. Option, It will lose market share to the firms that do not follow the price increase [ Consumers will prefer the firm that has lower prices since in a oligopoly the products offered are similar]