Exercise 3

Write T if the statement is true and F if it is not.

_________ 1. Monopoly is a market structure characterized by product differentiation.

_________ 2. Consumers' welfare is maximized under oligopoly.

_________ 3. Equilibrium situation exists in pure competition where P = MR = MC.

_________ 4. Collusion is prevalent under monopolistic competition.

_________ 5. Under monopolistic competition, product differentiation allows some firms to

obtain higher prices.

_________ 6. Consumer prefers a market characterized by oligopoly rather than monopolistic competition.

_________ 7. In order to sell more, a monopolist has to lower his price.

_________ 8. Under pure competition, economic profits are increased by the entry of new firms.

_________ 9. The demand curve of a firm under pure competition is infinitely elastic.

_________ 10. Collusion in its most complete form is exemplified by centralized cartel.

_________ 11. Under monopolistic competition, profit is maximized where P = MR = MC.

_________ 12. Under monopoly, sales per unit of time at different levels are attained where MR = P.

_________ 13. A monopolist follows the MC as its supply curve.

_________ 14. Short-run equilibrium under monopolistic competition implies that all firms change

Identical prices.

_________ 15. Monopolistic competition is the only market form embracing elements of both

monopoly and pure competition.

_________ 16. Under pure competition, the value of the marginal product of a resource is equal

to its marginal revenue product.

_________ 17. Easy entry into the industry is compatible with a high degree of collusion.

_________ 18. In the short-run equilibrium, the firm has an opportunity to change what it is doing.

_________ 19. Both collusive oligopolies and pure monopolies restrict output and raise prices for

greater profits.

_________ 20. Deterioration of the quality of goods or services is more prevalent under monopoly.

(Part 2 is attached)

MODULE 3.docx - Word Sign in X 8 6 & Share File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do Find do Cut Times New Ro - 12 - A" A" Aa - AaBbCcI AaBbCcD( AaBbC AaBbcc] Aab AaBbCCC EB Copy aac Replace Paste 1 Normal 1 No Spac... Heading 1 1 Heading 2 Subtitle Format Painter BI U - abe X x A . Z . A. BEE Title Select Clipboard Font Paragraph G Styles Editing . . 2 . . . 1 . . . 5 1 . . . 6 . . . 1 . . . 7 . . . 1 . . . 8 . . . 1 . . . 9 . . . 1 . . . 10 . . . 1 . . . 11 . . . . 12 . . . 6 . . A 2. A dewi ease in wie price vi one seller is usually matched by price decreases VI Ills rivals. 10. The marginal revenue curve is truncated. Exercise 2 Put a (V) on the box whether the following characteristics fall under their category or cross (x) if not. Monopolistic Pure Monopoly Oligopoly Competition Competition a. Differentiated products 2. 3. 4. b. Sellers act independently 5 . 6. 7. c. Freedom of entry is easy 9. 10. 1 1. 12. d. MC > P 13 . 14. 15 . 16. e. MR = MC 17 . 18. 19 . 20. f. Lower prices to sell more 21. 22. 23. 24. g. Uses nonprice competition 25. 26. 27. 28. h. Uses advertising to sell more 29 . 30. 31. 32. i. Allows consumer choice 33. 34. 35. 36. j. Demand curve reflects price 37. 38. 39 . 40. Exercise 3 Write T if the statement is true and F if it is not. 1. Monopoly is a market structure characterized by product differentiation. 2. Consumers' welfare is maximized under oligopoly. 3. Equilibrium situation exists in pure competition where P = MR = MC. 4. Collusion is prevalent under monopolistic competition. 5. Under monopolistic competition, product differentiation allows some firms to obtain higher prices. 5. Consumer prefers a market characterized by oligopoly rather than monopolistic competition. 7. In order to sell more, a monopolist has to lower his price. 8. Under pure competition, economic profits are increased by the entry of new firms. 9. The demand curve of a firm under pure competition is infinitely elastic. 10. Collusion in its most complete form is exemplified by centralized cartel. 11. Under monopolistic competition, profit is maximized where P = MR = MC. 12. Under monopoly, sales per unit of time at different levels are attained where MR = P. 1616 words DE - - 100% 8:19 PM Ed FW EM www.DesktopCada )6 6/25/2021