Question
1.Company A over the past four years has merged with its two largest competitors. Company A now controls almost 100% of the market share in
1.Company A over the past four years has merged with its two largest competitors. Company A now controls almost 100% of the market share in the industry. The market structure which best describes the industry is
monopoly
perfect competition
monopolistic competition
oligopoly
2.After the mergers, the market is controlled by Company A. One would expect the following effect on the market price and market quantity
The price rises and the quantity produced falls
The price rises and the quantity produced rises
The price falls and the quantity produced falls
The price falls and the quantity produced rises
3.Suppose the government decides to regulate the industry and break up Company A into 4 companies each with roughly 25% of the market. The market structure which best describes the industry is
oligopoly
monopoly
monopolistic competition
perfect competition
4.Suppose the government discovers that the four firms are actively working together to set prices and quantities. This behavior is known as
collusion and the firms are called a cartel
pure competition and the firms have easy entry
mutual interdependence and the firms are part of an oligopoly
natural monopoly and firms are self deregulating
5.A new technology has made entry into the industry easy. Twenty years later the government deregulates the industry. The deregulation results in over 50 new start-up companies. The products are similar, but not identical. The market structure which best describes the industry is
monopolistic competition
perfect competition
oligopoly
monopoly
6.What effect would easy entry and the addition of 50 new firms likely have on the market price and market quantity?
The price falls and the quantity produced rises
The price rises and the quantity produced falls
The price rises and the quantity produced rises
The price falls and the quantity produced falls
7.What effect would easy entry have on long run profits?
Economic profits are competed to zero
Economic profits increase
No effect
Losses are incurred
8.Which market structure is efficient?
perfect competition
monopolistic competition
oligopoly
monopoly
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