1 Of the four market industries, which leads to the best outcome for society in

Question

1 Of the four market industries, which leads to the best outcome for society in terms of efficiency?

A. Perfect Competition

B. Monopolistic Competition

C. Monopoly

D. Oligopoly

2 A Major difference between an oligopoly and monopoly is that:

A. Oligopolies must take into consideration what other firms in the market will do

B. Oligopoly firms can set prices while a monopoly firm cannot.

C. An oligopolist will produce where MR = MC, whereas the monopolist will not.

D. Unlike monopolies, oligoplies will produce that quantity that is socially optimal (ie, maximizes social surplus)

3 The kinked demand curve model is particularly useful in explaining:



A.   Flexible prices (i.e., prices move up and down) in oligopolistic markets

B.   Stability of prices (i.e., "sticky" prices) in perfectly competitive markets
C.   Flexible prices (i.e., prices move up and down) in perfectly competitive markets
D.   Stability of prices (i.e., "sticky" prices) in oligopolistic markets

Explanation / Answer

1) B

2) A

3) A

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