Wendy01

Exercise Problems:
1. If the minimum efficient scale of a single producer is small relative to the demand for an undifferentiated good, the market structure of the producer is best described as being: A. an oligopoly B. perfect competition C. monopolistic competition		Ans: B; perfect competition is characterized by the five conditions: 1. There are a large number of potential buyers and sellers. 2. The products offered by the sellers are virtually identical. 3. There are few or easily surmountable barriers to entry and exit. 4. Sellers have no market-pricing power. 5. Non-price competition is absent. Here, the minimum efficient scale of a single producer is small relative to the demand, and the undifferentiated good are both in the five conditions.