True or false? 1. In perfectly competitve industry, the demand curve for an indi
ID: 1209117 • Letter: T
Question
True or false?
1. In perfectly competitve industry, the demand curve for an individual firm is downward sloping?
2. Firms have barriers to enter the market with monopolist competition.
3. In a market with two firm producing differentiated products, demand for a firms product is positively related to competitor price.
4. In an industry where there are few sellers, price will necessaily be higher than the competitive equilibrium price.
5. the second welfare theorem of economies states that if preference are convex, then any Pareto optimal allocation could be achieved as a competitve equilibrium after some reallocation of initial endowment.
6. Consider a cournot duoply in which each firm has constant marginal cost, but one is higher than the other. If market demand is linear and if Firm 1's cost increases then Firm 2's equilibrium production quantity will increase.
7. Every allocation on the contract curve is Pareto optimal.
8. A monopolist will always produce half times a perfectly competitive quantity.
9. In an Oligopolistic market with two firms, if the two firms successfully form a cartel they can attain the same price in the market as a monopolist.
Explanation / Answer
1. False. Demand curve is parallel to x-axis.
2. False. There is free entry and exit of firms under monopolistic competition.
3. True. As differentiated goods are substitutes of each other. Increase in the price of one good leads to increase in the price of its substitute good.
4. True as few firms in the market given price control to the firms so lead to higher prices as compared to perfectly competitive market.
5. True
6. Not clear... something is missing
7. True
8. False. It is not necessary or fixed that monopolist will produce half of perfectly competitive quantity.
9. True
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.