ECON101 Principles of Microeconomics Homework Note: Total point is 20. NAME I. M
ID: 1122304 • Letter: E
Question
ECON101 Principles of Microeconomics Homework Note: Total point is 20. NAME I. Multiple Choices (1 point for each question) 1. The typical result of monopoly is ID: prices and output than we find in a competitive market. a. lower, lower b. higher, higher c. higher, lower d. lower, higher e. higher, the same 2. Three natural barriers to entry are: a. control of resources, economies of scale, and licensing. b. economies of scale, problems raising capital, and control of resources. c. problems raising capital, patents and copyright law, and licensing. d. control of resources, patents and copyright law, and economies of scale. e. control of resources, economies of scale, and licensing. 3.In the soda industry, production costs per unit continue to fall as the firm expands. In this type of industry, smaller rivals trying to enter the industry: a. will easily be able to gain market power b. have lower average costs c, do not have high fixed costs. d. will have much higher average costs. e. expenence a 4.Both monopolies and competitive firms: a. are price-takers. b. are c. face barriers to entry d. make long-run economic profits. e. try to maximize profits. 5. The price effect refers to how: lower prices affect the quantity sold. firms can set their prices. firms choose their quantity lower prices affect revenue. lower output affects the price. a. b. c. d. e.Explanation / Answer
1.
Since a monopoly firm changes the higher price and produces less output compared to the perfectly competitive firm.
Hence it can be said that the result of monopoly is higher prices and lower output than we find in a competitive market.
Hence option C is the correct answer.
2.
The three natural barriers to entry will be control of resources, patents and copyright law, and economies of scale. All these barriers create a great hurdle for the new firm to enter the market.
Hence option d is the correct answer.
3.
Since in the soda industry as the firm expands the production cost decreases per unit. therefore in this type of industry, smaller rivals trying to enter the industry because it will have much higher average costs.
Therefore the correct answer will be option d.
4.
Both the monopolies and competitive firms try to maximise the profits. A monopoly is price maker and competitive firm is price taker and in the competitive firm there is free entry and in the long-run competive firm earn zero economic profit.
Hence option e is the correct answer.
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