The main assumption of the Cournot model is more plausible the larger the number of firms in the industry. At the price chosen by the dominant firm, output by the dominant firm is determined by letting the other firms produce as much as they wish. Because the two demand curves have different shapes and slopes, the two levels of output are sold at the same price, p 2. With perfect price discrimination each customer pays a different price based on willingness to pay. There is not an agreed upon model of oligopoly because mutual interdependence makes it impossible to develop one strategy that is optimal in all situations.
Which of the following is not a reason why cartels fail? What happens to the labor demand curve for tomato pickers if workers become stronger and smarter? A monopolist does not face the same constraints as an open or free market but instead is bounded by the consumers' demand for its products. If the expected future price of the product rises falls , the supply curve in the present period shifts leftward rightward. A monopoly causes input prices to rise. In a monopolistic market, there are instances where changes in demand curves do not produce a change in both price and quantity and. In the dominant firm model, when the share of industry output produced by the dominant firm is none of the above.
Here the firm is a price-maker for her product. An oligopolistic industry can be characterized by all of the following except many sellers. The monopolist determines its profit maximizing price, and then supplies a quantity of goods that allows it to achieve that price. So it is actually beside the point. Wages rise in both industries while employment increases in X and decreases in Y. To maximize profits, the price markup should equal the inverse of demand elasticity. A natural monopoly is an industry in which production cost is minimized if one firm supplies the entire output.
Which of the following statements about the effects of monopoly is incorrect? The demand curve that a monopolistically competitive firm faces is downward sloping but fairly elastic. Economists recognize four market structures: perfect competition, monopolistic competition, oligopoly and monopoly. Currently, there are plenty of seats on the train, and it is never crowded. The demand curve for a monopolist slopes downward because it faces the market demand curve. Which of the following reasons did not contribute to its success? Under a two-part tariff with many consumers having different demands, the profit-maximizing monopolist does not have a clearly defined profit-maximizing pricing scheme.
If an excess profits tax is imposed on firms, the model of monopolistic competition predicts that there will be no change in output or in price. Workers are paid their marginal value product. This criticism relates to the fact that the firm does not operate where price is equal to marginal cost. This again shows that under monopoly there is no any specific quantity of the product supplied at a price. A monopolist can choose any price along the market demand curve.
There are 1,500 seats available at the concert venue. Which of the following is a not a way Americans arbitrage price differences in prescription drugs between Canada and the U. The demand curve for labor when all inputs are variable is downward-sloping since both the substitution effect and the output effect imply greater employment at a lower price. In comparing a monopoly and a competitive firm in the long run, which of the following statements is incorrect? Thus, jeepeneys, fx or buses cannot enter their route and pose any competition with them. Monopolistic competition is inefficient in that firms fail to produce at the lowest possible average cost. All of the above are drawbacks of the four-firm concentration ratio. When demand is unit elastic, price approaches marginal revenue.
It is worth noting that the supply curve shows how much output a firm will produce at various given prices of a product. Which of the following is not likely to result from the imposition of a price ceiling upon a monopolist? In the Stackelberg model of oligopoly, a leader firm selects its output first, taking the reactions of follower firms into account. Under what situation is efficiency reached? Which of the following is the consequence of a firm with monopoly power? For an individual competitive firm, the supply curve for an input is horizontal The supply curve of an input to the entire economy is generally thought to be less elastic than the supply curve faced by an individual firm. We would expect price discrimination to be least successful in the market for jeans. The relationship between price and quantity supplied is positive or direct.
However, usually the shift in demand would lead to the changes in both output and price. Which model is the best description of the real world? Which of the following is not true of the industry demand curve for labor under competi-tion? A monopsony is the sole buyer of some type of input. Which of the following statements is correct for a monopolist? However, it is unlike the competitive firm in that it sells a differentiated product, whereas the competitive firm does not. So we cannot locate any point on the supply curve. The smaller the share of the total market employed by an industry, the more elastic is the input supply curve. Most economists would not advocate government intervention in monopolistically competi-tive industries because the product variety produced by monopolistic competition is a benefit that helps offset its relatively small welfare costs. The market demand curve tells us how much the monopolist will supply.
Which of the following best describes the short-run response within the competitive corn market? What is the H index for this industry? Because there is only one seller, the monopolist has market power. Complication: Take note that the demand curve above is the total demand curve by all consumers in the market, as if one firm's output affects the price by lowering it with every additional output sold. However, shifts of the supply curve are determined by the determinants of Supply. Total surplus is less in monopoly. Therefor the marginal revenue will be less than the average revenue. The change in employment for the industry will be less than twelve percent. An important feature of the monopoly is that, unlike a competitive firm, the monopolist does not have the supply curve.