Economics 【Reading 16】Sample 2012, following, only, perfect

dkishore1

Which of the following is a characteristic of perfect competition?

A) There are no barriers to entry into the market.

B) The products of different firms are sold at different prices.

C) There are a few sellers.

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The only true statement listed in the question is that, under perfect competition there are no barriers to entry into the market. Each of the other possible answers is not a characteristic of perfect competition. While the competitors can earn positive economic profits in the short-run, they cannot earn long term economic profits due to ease of entry and exit.

mimiaifeng

回复 6# dkishore1


    价格接受者面对的是完全弹性曲线。所以答案C是错的。要选A. 没问题了。题目答案是正确的。

mimiaifeng

回复 6# dkishore1

价格接受者公司应该面对弹性需求曲线吧？？完全竞争市场。

terpsichorefan

thanks for your sharing. how generous u are.

hinsafdar

The type of economic market that features a large number of competitors offering differentiated products is best characterized as:

A) perfect competition.

B) monopolistic competition.

C) oligopoly.

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Monopolistic competition is used to describe markets where there are a large number of competitors producing differentiated products.
In perfect competition all firms produce identical products. In an oligopoly there is a small number of firms.

hinsafdar

Assume that the market for paper supplies and the market for toothpicks have the following characteristics:

The Market for Paper Supplies is comprised of:

• A large number of independent sellers

• Differentiated products

• Low barriers to entry/exit

The Market for Toothpicks is comprised of:

• A large number of independent sellers

• Homogeneous products

• No barriers to entry/exit

The Papyrus Company operates in the market for paper supplies and Wudden Floss operates in the toothpick market. The sales managers for both companies want to know how a change in price will affect the quantity sold.

Which of the following choices best completes the following sentence? If both firms increase prices, the quantity sold by Papyrus Company will:

A) increase, and the quantity sold by Wudden Floss will decrease.

B) decrease, and so will the quantity sold by Wudden Floss.

C) decrease, and Wudden Floss will sell nothing.

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Papyrus Company is an example of a price searcher engaged in monopolistic competition (low barriers to entry). Thus, the company faces a downward sloping demand curve and highly elastic demand. An increase in price will result in fewer units sold. Wudden Floss is an example of a price taker operating in a purely competitive market. Thus, the firm faces a horizontal demand curve and perfectly elastic demand. An increase in price will result in no units sold. In a purely competitive market, the firm must take the market price.

hinsafdar

Which one of the following structures is characterized by free entry and exit, a differentiated product, and price searcher behavior?

A) Monopolistic competition.

B) Oligopoly.

C) Pure competition.

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Monopolistic competition is another name for competitive price-searcher markets. There are a large number of independent sellers, each produces a differentiated product, each market has a low barrier to entry, and each producer faces a downward sloping demand curve.

hinsafdar

Which of the following most accurately describes a market structure that has one seller of a specific, well-defined product that has no good substitutes?

A) Monopoly.

B) Perfect competition.

C) Oligopoly.

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A monopoly is characterized by one seller, a specific and well-defined product for which there is no good substitutes, and high barriers to entry.

hinsafdar

Which of the following most accurately describes the competitive structure that is characterized by a firm that operates with the lowest average total cost and has the capacity to produce all of an industry’s output?

A) Natural monopoly.

B) Competitive monopoly.

C) Oligopoly.

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A natural monopoly is characterized by a single firm within the industry that has sufficient capacity to meet the entire demand of an industry because at that scale the lowest average total cost is achieved.

hinsafdar

An economic market characterized by a large number of independent firms all producing identical products is best described as:

A) monopolistic competition.

B) monopoly.

C) perfect competition.

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In a perfectly competitive economic market, there are many independent firms, each seller is small relative to the total market, and there are no barriers to entry or exit.