100 Questions
What is a characteristic of a monopolist's marginal revenue curve?
It lies below their demand curve.
What is the goal of a firm in an imperfect market?
To maximize profit
What is a consequence of imperfect markets?
Allocative and productive inefficiencies
What is the purpose of government intervention in imperfect markets?
To control monopolistic and oligopolistic powers
What characterizes a monopoly?
A single firm dominating a market
What is a feature of an oligopoly?
Interdependence among firms
What is a characteristic of a kinked demand curve in an oligopoly?
It discourages competitive price changes
What is a characteristic of monopolistic competition?
Many firms selling differentiated products
What happens to profits in monopolistic competition in the long run?
They are eroded to normal profits
Why do firms in monopolistic competition engage in non-price competition?
To build customer loyalty
What is a characteristic of imperfect markets?
Lack of perfect competition
What is a monopoly?
A market with a single company controlling the entire supply of a product or service
What is the main advantage of a monopoly?
The ability to set prices and influence market output
What prevents new entrants in a monopoly?
Barriers to entry
What is the characteristic of an oligopoly?
A few firms dominating a market
What is the purpose of collusion in an oligopoly?
To maximize collective profits
What is the shape of the demand curve for an oligopolist?
Kinked
What is the characteristic of monopolistic competition?
Many firms selling products that are differentiated but serve a similar purpose
What is the focus of firms in monopolistic competition?
Non-price competition
What happens to economic profits in monopolistic competition in the long run?
They tend to normalize
What is the result of monopolies and oligopolies maintaining prices higher than marginal costs?
Lower output and higher prices
What is a potential consequence of monopolistic competition?
Redundant expenditures on advertising and marketing
Why do governments intervene in markets with monopolies and oligopolies?
To increase market competition and reduce inefficiencies
What is a characteristic of perfect competition?
Prices reflecting true scarcity of products
What is the result of imperfect markets?
Challenges in terms of economic efficiency and equitable outcomes
What is a form of government intervention?
Antitrust laws
What is a consequence of monopolistic competition?
A variety of products and innovations
What is the goal of government intervention in markets with monopolies and oligopolies?
To increase economic efficiency and reduce inefficiencies
What is a characteristic of monopolies and oligopolies?
High barriers to entry
What is the result of regulatory and economic policies?
Harnessing the benefits of market competition while mitigating its downsides
What is a key characteristic of a monopoly?
A single company controlling the entire supply
What is a common feature of oligopolistic markets?
A few firms producing differentiated or standardized products
What is a key difference between monopolistic competition and perfect competition?
Product differentiation
What is a likely outcome of a monopoly in the long run?
Economic profits increase indefinitely
What is a key goal of firms in oligopolistic markets?
To set prices and limit production
What is a characteristic of the demand curve in an oligopoly?
It has a kinked shape
What is a common strategy used by firms in monopolistic competition?
Non-price competition
What is a common barrier to entry in a monopoly?
All of the above
What is a consequence of imperfect markets?
Market inefficiencies
What is a primary consequence of monopolies and oligopolies maintaining prices higher than their marginal costs?
Allocative inefficiency and potential welfare losses
What is a key difference between a monopoly and an oligopoly?
The number of firms in the market
What is a potential benefit of monopolistic competition?
A variety of products and innovations
Why do governments intervene in markets with monopolies and oligopolies?
To increase economic efficiency and reduce inefficiencies
What is a characteristic of imperfect markets?
Realistic conditions that diverge from perfect competition
What is a potential drawback of monopolistic competition?
Redundant expenditures on advertising and marketing
What is a goal of government intervention in markets with monopolies and oligopolies?
To increase market competition and reduce inefficiencies
What is a consequence of imperfect markets in terms of economic efficiency?
Reduced economic efficiency
In a monopoly, what is the primary source of the firm's market power?
Barriers to entry
What is a form of government intervention in markets with monopolies and oligopolies?
Both A and B
In an oligopoly, what is the primary feature of the demand curve?
It is kinked
What is a challenge posed by imperfect markets?
Achieving economic efficiency
What is the primary goal of government intervention in imperfect markets?
To enhance competitive outcomes and protect consumer interests
What is a goal of regulatory and economic policies in imperfect markets?
To harness the benefits of market competition while mitigating its downsides
What is the primary consequence of monopolies and oligopolies setting prices above marginal cost?
Welfare losses to society
What is the primary characteristic of monopolistic competition?
Many firms sell differentiated products
What is the primary reason for the interdependence of firms in an oligopoly?
The actions of one firm affect the market and other firms
What is the primary reason for the strategic behavior of firms in oligopolies?
To engage in non-price competition
What is the primary consequence of imperfect markets for resource allocation?
Underutilization of resources
What is the primary reason for firms to engage in advertising in monopolistic competition?
To build customer loyalty
What is the primary implication of imperfect markets for economic welfare?
Welfare losses to society
What is a key difference between a monopoly and an oligopoly?
The number of firms in the market
What is the primary goal of firms in an oligopoly?
To maximize collective profits through collusion
What is a characteristic of monopolistic competition?
Many firms produce differentiated products
What is the result of monopolies and oligopolies maintaining prices higher than marginal costs?
Reduced consumer surplus
What is a barrier to entry that helps maintain a monopoly?
All of the above
What is a characteristic of the demand curve in an oligopoly?
It is kinked
What is a primary advantage of monopolistic competition?
Product differentiation and variety
What is the goal of government intervention in markets with monopolies and oligopolies?
To increase competition and innovation
What is a key implication of the downward-sloping demand curve faced by a monopolist?
Higher prices and lower output compared to perfect competition
What is a characteristic of imperfect markets that leads to welfare losses to society?
Underutilization of resources
What is a consequence of imperfect markets?
Market inefficiencies and deadweight loss
What is a common feature of oligopolistic markets?
Firms producing differentiated products
What is the primary goal of government intervention in imperfect markets?
To enhance competitive outcomes and protect consumer interests
In an oligopoly, what is the primary implication of interdependence among firms?
Firms engage in non-price competition strategies
What is a key difference between monopolistic competition and perfect competition?
Firms earn above-normal profits in the long run in monopolistic competition
What is the primary reason for the inefficiencies in imperfect markets?
Prices are higher and output is lower compared to perfect competition
What is a key feature of market dynamics in oligopolies?
Firms' decisions on pricing and output affect the market
What is the primary consequence of monopolies and oligopolies maintaining prices higher than marginal costs?
Resources are underutilized, leading to welfare losses
What is a characteristic of monopolistic competition that leads to erosion of profits?
Ease of market entry and exit
What is the primary reason for government intervention in markets with monopolies and oligopolies?
To enhance competitive outcomes and protect consumer interests
What is a key implication of monopolies and oligopolies maintaining prices higher than their marginal costs?
Lower output and higher prices
What is a potential outcome of monopolistic competition?
Increased redundant expenditures on advertising and marketing
What is the main goal of government intervention in markets with monopolies and oligopolies?
To promote allocative efficiency and reduce welfare losses
What is a characteristic of imperfect markets?
They present challenges in terms of economic efficiency and equitable outcomes
What is a potential consequence of redundant expenditures on advertising and marketing?
Reduced innovation and variety of products
What is the focus of firms in imperfect markets?
To differentiate their products and services
What is a key difference between monopolies and oligopolies?
The number of firms in the market
What is the primary goal of regulatory and economic policies?
To increase market competition and reduce inefficiencies
What is a potential drawback of monopolistic competition?
Reduced innovation and variety of products
What is the primary consequence of imperfect markets in terms of economic efficiency?
Allocative inefficiency
What is a consequence of monopolies and oligopolies maintaining prices higher than their marginal costs?
Allocative inefficiency
What is a goal of government intervention in markets with monopolies and oligopolies?
To increase market competition and reduce inefficiencies
What is a characteristic of monopolistic competition?
Many firms produce differentiated products
What is a potential drawback of monopolistic competition?
Redundant expenditures on advertising and marketing
What is a common feature of oligopolistic markets?
Few firms producing either homogeneous or differentiated products
What is a primary consequence of imperfect markets?
Allocative inefficiency and potential welfare losses
What is a goal of regulatory and economic policies?
To increase market competition and reduce inefficiencies
What is a characteristic of imperfect markets?
Price does not reflect the true scarcity of the product
What is a potential benefit of monopolistic competition?
A variety of products and innovations
What is a challenge posed by imperfect markets?
Allocative inefficiency and potential welfare losses
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