Question

me level 25 Monpolistic compninion essihits all of the fodtoreving charncterini A) asy entry and esit. C) D) large sumber of small fims Those ณ" an competents of monopolitie competition. 26. Firms that opernte in an oigopoly market stnasture woald have an incertive tor A) increaoe sales vohme with price seductions B) incresse peofit margins with price increases C) engage in explicit or implicit colusion D) espand market share with price ceiling 27. The stahility of a cartel is entasced if A) a has many members B) ittle members can arteremiae lǐeir pecdiets. D) there are weak harriers to eriry. 28. Which of the following statements is coorrect? A) Oligopolists do not make economie protes in the long run. B) Oligopolies always result in efficient ouncomes C) Oligopolists never consider competitors pricing. D) An oligopoly exists when there are a few fums in an industry 29. Each oligopolistic flem recognizes that it must take inmo account the belhavior of 'is competitoes when it makes pricing decisions. This recognition is called A) monopolistic behavior B) profit-maximization behavior C) mutual interdependence. D) mutual dependence. Page 6

Answer 1

(24) (B)

Firms which are imperfectly competitive will produce less output and charge higher price compared to firms in perfectly competitive market.

(25) (B)

Monopolistically competitive firms produce similar but differentiated products.

(26) (C)

Collusion increases profit for such firms.

(27) (C)

If cartel members have similar cost structures, they have less incentive to cheat and the cartel is more stable.

(28) (D)

An oligopoly market is dominated by few large firms whose price-output decisions are interdependent.

(29) (C)