17. Using the graph to the right, which of the following prices and quantities w
ID: 1125788 • Letter: 1
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17. Using the graph to the right, which of the following prices and quantities would result from fair return pricing? p4 a) p1,0 b) p2,q3 c) p3, q2 p3 p2 MC pl q1 92 q3 Q 18. When compared to a pure monopoly firm with identical costs of production, and the same demand: a) a perfectly competitive industry will produce more and charge a higher price. b) a perfectly competitive industry will produce less and charge a higher price. c) a perfectly competitive industry will produce less and charge a lower price. d) a perfectly competitive industry will produce more and charge a lower price. 19. In the long run, monopolistic competition is characterized by excess capacity because firms: a) are always profitable in the long run b) charge a price that is less than MC c) produce at an output level that is less than the least-cost level of output. d) demand for a product is perfectly elastic in this type of industry 20. What is a likely characteristic of an oligopolistic industry? a) There are minimal barriers to entry b) The market demand curve is perfectly elastic. c) There is little or no advertising. d) Price and output decisions of firms are interdependent. 21. Which is an example of failure competitive markets to provide the socially optimal amount? a) There is usually a surplus of tickets for events at the summer Olympics. b) The price of gasoline has risen dramatically as a result of the increasing demand, limitations on supply, and oligopoly in the oil industry e) Bees help to pollinate neighboring orchards as well as providing honey to the beekeeper. d) Declining prices of houses are leading to an increase in sales 22. A good or service that a business can charge for, and consumption by one person does not reduce the ability of other to consume the same product is considered a a) public good. b) quasi-public good. c) private good. d) public-private partnership.Explanation / Answer
17) A fair return pricing means a point where the Price = Average cost.
In the above-given graph, "P3 and Q2" is the fair return price and quantity.
18) In a perfect competition when compared to a monopoly a firm with the identical cost of production and same demand will "Produce more and charge a lower price".
19) The correct answer is "C". In a monopolistic competition, a firm's output level is less than the least cost level of output.
20) In an oligopoly market the price and output decision of a firm "are interdependent"
21) "B" an oligopoly market is an example of market failure unable to produce socially optimal amount.
22) "A public Good" as public goods are non-rivalrous any consumption of those goods by one individual result in no exclusion or decrease in benefit of the other using the same amount.
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