ECON 204 Fall 2017 Final Exam 15. Which of the following market structures is ch
ID: 1130595 • Letter: E
Question
ECON 204 Fall 2017 Final Exam 15. Which of the following market structures is characterized by in terdependent pricing and output decisions? A. Monopoly B. Oligopoly C. Monopolistic competition. D. Perfect competition. Refer the graph below for Question 16 MC Pe Dernand Qm Qe Quantity MR 16. Refer to the graph shown above. Areas B and D represent: A. the loss of surplus by consumers resulting from a monopoly. B. the welfare loss to society from a monopoly. C. consumer surplus redistributed to the monopolist. D. the loss of surplus by producers resulting from a monopoly. 17. A monopoly firm selling textbooks to students in a small town is currently maximizing profits by charging a price of $50 per book. It follows that the marginal cost of textbooks is: A. equal to S50 B. less than S50. C. greater than $50. D. greater than the average total cost. 18. If the corn industry is perfeetly competitive with a market price of S2 per bushel and a corm farmer in the industry charges $4 per bushel, how many bushels would the farmer sell? A. some, but fewer than he would at a price of S2 B. more than he would at a price of $2 C. just as many as he would at a price of $2 D. none (or zero) 19. A reduction in the supply of labor will cause wages to A. decrease and employment to decrease B. increase and employment to decrease. C. increase and employment to increase. D. decrease and employment to increase.Explanation / Answer
15.C. Monopolistic Competition
In monoploistic competition,firms are independent to each other in setting up pricing and output decision.
16.B. the wellfare loss to society from a monopoly
The area B and D represents the net welfare loss caused by monopoly during transaction between consumers and producers
17.B. less than $50
in Monopoly, P>MC= MR. as a firm is the sole producer , so it can maximize its profit by reducing price, thats why here P>MC=MR
18.D. None(zero)
In a perfectly competitive market, if the farmer charged greater than the market price, conumers will likely to buy from other farmers at market price.
19. B. increases and employment to decrease.
as reduction in supply of labour causes the remaining labours to raise their wage. Which will eventually increases the cost of production of the industry. To minimize cost, the industry will decrease the employment.
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