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What is the difference between firm and industry under monopoly?- a)There is no difference.
- b)A firm has control over supply, while an industry does not.
- c)An industry has control over supply, while a firm does not.
- d)A firm produces multiple products, while an industry produces a single product.
Correct answer is option 'A'. Can you explain this answer?
a)
There is no difference.
b)
A firm has control over supply, while an industry does not.
c)
An industry has control over supply, while a firm does not.
d)
A firm produces multiple products, while an industry produces a single product.
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Dev Patel answered |
Under monopoly, there is no difference between firm and industry. The monopolist is the sole producer for a product, making the firm and the industry one and the same.
What are the preconditions for successful price discrimination by a monopolist?- a)Perfect competition and unlimited resale of the product.
- b)Monopoly and ability to resell the product.
- c)No possibility of resale of the product and separation of markets.
- d)High transportation costs and legal intervention.
Correct answer is option 'C'. Can you explain this answer?
a)
Perfect competition and unlimited resale of the product.
b)
Monopoly and ability to resell the product.
c)
No possibility of resale of the product and separation of markets.
d)
High transportation costs and legal intervention.
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Dev Patel answered |
Price discrimination by a monopolist is possible under certain conditions. The preconditions for successful price discrimination are:No Possibility of Resale of Product: Price discrimination is successful when the product or service cannot be easily resold from low-priced to high-priced markets. This prevents arbitrage and is common in services like medical care, legal advice, and personal services.Separation of Markets: Markets should be separated geographically or politically, making it difficult for buyers and sellers to interact between markets. Dumping, where products are sold at different prices in different markets, is an example of this.These conditions, along with other factors like consumer peculiarities and different demand elasticities, enable a monopolist to engage in successful price discrimination.
What does "perfect competition" refer to in a market?- a)A market with a single seller and no substitutes.
- b)A market with a few sellers offering differentiated products.
- c)A market with a large number of buyers and sellers dealing in homogenous products.
- d)A market with strict government regulations.
Correct answer is option 'C'. Can you explain this answer?
a)
A market with a single seller and no substitutes.
b)
A market with a few sellers offering differentiated products.
c)
A market with a large number of buyers and sellers dealing in homogenous products.
d)
A market with strict government regulations.
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Dev Patel answered |
Perfect competition refers to a market situation where there are many buyers and sellers dealing in homogenous products. It is characterized by a large number of participants and uniform products.
What does the demand curve look like under perfect competition?- a)It slopes upward.
- b)It is a horizontal line.
- c)It is a vertical line.
- d)It slopes downward.
Correct answer is option 'D'. Can you explain this answer?
a)
It slopes upward.
b)
It is a horizontal line.
c)
It is a vertical line.
d)
It slopes downward.
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Dev Patel answered |
The demand curve under perfect competition slopes downward. This means that as the price increases, the quantity demanded decreases, and vice versa.
What is the primary reason for the stability of prices in oligopoly markets, according to Sweezy's Kinked Demand Curve Model?- a)Government regulations.
- b)Price collusion among firms.
- c)Competitive retaliation by firms.
- d)The kinked nature of the demand curve.
Correct answer is option 'D'. Can you explain this answer?
a)
Government regulations.
b)
Price collusion among firms.
c)
Competitive retaliation by firms.
d)
The kinked nature of the demand curve.
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Dev Patel answered |
The primary reason for the stability of prices in oligopoly markets, according to Sweezy's Kinked Demand Curve Model, is the kinked nature of the demand curve. When an oligopolistic firm reduces its price, it expects competitors to match the price cut, leading to a relatively inelastic demand for price decreases. Conversely, if the firm raises its price, competitors are unlikely to follow suit, leading to a more elastic demand for price increases. This kinked demand curve results in price stability.
What is the term for a situation where a monopolist charges different prices to different buyers for the same product?- a)Perfect competition.
- b)Price discrimination.
- c)Monopsony.
- d)Cartel.
Correct answer is option 'B'. Can you explain this answer?
a)
Perfect competition.
b)
Price discrimination.
c)
Monopsony.
d)
Cartel.
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Dev Patel answered |
Price discrimination occurs when a monopolist charges different prices to different buyers for the same product.
In perfect competition, what determines the market price of products?- a)The buyers' willingness to pay.
- b)The sellers' production costs.
- c)The industry's demand and supply forces.
- d)Government intervention.
Correct answer is option 'C'. Can you explain this answer?
a)
The buyers' willingness to pay.
b)
The sellers' production costs.
c)
The industry's demand and supply forces.
d)
Government intervention.
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Dev Patel answered |
In perfect competition, the market price of products is determined by the industry, taking into account the market demand and market supply forces. It's the equilibrium point where these curves intersect.
What happens to a firm's demand curve when it reduces its price in an oligopolistic market, assuming competitors match the price cut?- a)It becomes more elastic.
- b)It becomes less elastic.
- c)It remains unchanged.
- d)It shifts to the right.
Correct answer is option 'B'. Can you explain this answer?
a)
It becomes more elastic.
b)
It becomes less elastic.
c)
It remains unchanged.
d)
It shifts to the right.
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Dev Patel answered |
When a firm reduces its price in an oligopolistic market, assuming competitors match the price cut, its demand curve becomes less elastic. This means that the quantity demanded is not very responsive to price changes, and the firm may not experience a significant increase in sales. This is one of the reasons why oligopolistic firms are often reluctant to change their prices.
Which degree of price discrimination involves dividing customers into separate classes and charging each class a different price?- a)First degree.
- b)Second degree.
- c)Third degree.
- d)Perfect discrimination.
Correct answer is option 'C'. Can you explain this answer?
a)
First degree.
b)
Second degree.
c)
Third degree.
d)
Perfect discrimination.
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Dev Patel answered |
Third-degree price discrimination involves dividing customers into separate classes and charging each class a different price based on their willingness to pay.
Why do oligopolistic firms often avoid changing their prices, according to Sweezy's Kinked Demand Curve Model?- a)Because they are prohibited by government regulations.
- b)Because they prefer to engage in price collusion.
- c)Because price cuts lead to competitive retaliation and price increases lead to more elastic demand.
- d)Because they want to maintain a competitive advantage.
Correct answer is option 'C'. Can you explain this answer?
a)
Because they are prohibited by government regulations.
b)
Because they prefer to engage in price collusion.
c)
Because price cuts lead to competitive retaliation and price increases lead to more elastic demand.
d)
Because they want to maintain a competitive advantage.
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Dev Patel answered |
Oligopolistic firms often avoid changing their prices, according to Sweezy's Kinked Demand Curve Model, because price cuts lead to competitive retaliation from rivals, and price increases lead to a more elastic demand, resulting in reduced sales. This makes price changes unattractive and contributes to price stability in oligopoly markets.
What is the key feature of monopolistic competition?- a)Large number of buyers and sellers.
- b)Identical products produced by all firms.
- c)Complete information available to consumers and producers.
- d)Product differentiation among firms.
Correct answer is option 'D'. Can you explain this answer?
a)
Large number of buyers and sellers.
b)
Identical products produced by all firms.
c)
Complete information available to consumers and producers.
d)
Product differentiation among firms.
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Dev Patel answered |
The key feature of monopolistic competition is product differentiation among firms. In monopolistic competition, there are many sellers, but each produces a product that is slightly different from those of its competitors. These differences can be in terms of quality, branding, packaging, or other attributes. This product differentiation allows firms to have some degree of monopoly power over their own product, as consumers may have preferences for one brand or variation over another.
Which type of oligopoly model explains why prices tend to remain stable in oligopolistic markets?- a)Cournot Model.
- b)Edgeworth Model.
- c)Sweezy's Kinked Demand Curve Model.
- d)Centralized Cartel Model.
Correct answer is option 'C'. Can you explain this answer?
a)
Cournot Model.
b)
Edgeworth Model.
c)
Sweezy's Kinked Demand Curve Model.
d)
Centralized Cartel Model.
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Dev Patel answered |
Sweezy's Kinked Demand Curve Model explains why prices tend to remain stable in oligopolistic markets. According to this model, oligopolistic firms face a kinked demand curve, meaning that they believe price increases will not be matched by competitors, while price cuts will be matched. This leads to price stability as firms are reluctant to change their prices. It provides an explanation for the observed rigidity of prices in many oligopoly markets.
Under monopoly, what type of control does the monopolist have over the supply of a commodity?- a)Limited control.
- b)No control.
- c)Partial control.
- d)Full control.
Correct answer is option 'D'. Can you explain this answer?
a)
Limited control.
b)
No control.
c)
Partial control.
d)
Full control.
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Dev Patel answered |
Under monopoly, the monopolist has full control over the supply of a commodity. They can dictate the quantity supplied and set the price.
What is the term for the situation in which firms in an oligopolistic industry tacitly agree to set the same price for their products?- a)Collusion.
- b)Price leadership.
- c)Competitive retaliation.
- d)Cartelization.
Correct answer is option 'B'. Can you explain this answer?
a)
Collusion.
b)
Price leadership.
c)
Competitive retaliation.
d)
Cartelization.
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Dev Patel answered |
The term for the situation in which firms in an oligopolistic industry tacitly agree to set the same price for their products is "price leadership." In price leadership, one firm, often the largest or dominant one, sets the price, and other firms in the industry follow suit without a formal agreement. This form of imperfect collusion helps maintain price stability in the oligopoly market.
Under what condition might a monopolist choose to produce more at lower costs?- a)When facing inelastic demand.
- b)When facing elastic demand.
- c)When operating under increasing costs.
- d)When operating under diminishing costs.
Correct answer is option 'D'. Can you explain this answer?
a)
When facing inelastic demand.
b)
When facing elastic demand.
c)
When operating under increasing costs.
d)
When operating under diminishing costs.
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Dev Patel answered |
A monopolist might choose to produce more at lower costs when operating under diminishing costs. This allows them to maximize their profits by producing more units at lower costs.
In a discriminating monopoly, what must be equalized to achieve equilibrium?- a)Marginal revenue in different markets.
- b)The number of units sold in each market.
- c)The total revenue from all markets.
- d)The government-set price.
Correct answer is option 'A'. Can you explain this answer?
a)
Marginal revenue in different markets.
b)
The number of units sold in each market.
c)
The total revenue from all markets.
d)
The government-set price.
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Dev Patel answered |
To achieve equilibrium in a discriminating monopoly, marginal revenue in different markets must be equalized. The monopolist adjusts prices and quantities to ensure this equality.
What happens to a firm's demand curve in oligopoly when it raises its price, assuming competitors do not follow suit?- a)It becomes more elastic.
- b)It becomes less elastic.
- c)It remains unchanged.
- d)It shifts to the left.
Correct answer is option 'A'. Can you explain this answer?
a)
It becomes more elastic.
b)
It becomes less elastic.
c)
It remains unchanged.
d)
It shifts to the left.
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Dev Patel answered |
When a firm in an oligopolistic market raises its price, assuming competitors do not follow suit, its demand curve becomes more elastic. This means that the quantity demanded becomes more responsive to price changes, and the firm may experience a significant decrease in sales. Oligopolistic firms are often cautious about raising prices for this reason.
Which type of market structure is characterized by a few dominant firms that control the supply of a commodity?- a)Perfect competition.
- b)Monopoly.
- c)Oligopoly.
- d)Monopolistic competition.
Correct answer is option 'C'. Can you explain this answer?
a)
Perfect competition.
b)
Monopoly.
c)
Oligopoly.
d)
Monopolistic competition.
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Dev Patel answered |
The market structure characterized by a few dominant firms that control the supply of a commodity is known as "oligopoly." In an oligopoly, a small number of large firms dominate the industry, and their actions have a significant impact on prices and competition. Oligopolistic industries are often marked by intense competition among the few major players.
In the context of oligopoly, what is the term used to describe the situation where a price cut by one firm leads to competitors matching the price cut?- a)Collusion.
- b)Price leadership.
- c)Competitive retaliation.
- d)Cartelization.
Correct answer is option 'C'. Can you explain this answer?
a)
Collusion.
b)
Price leadership.
c)
Competitive retaliation.
d)
Cartelization.
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Dev Patel answered |
In the context of oligopoly, the term used to describe the situation where a price cut by one firm leads to competitors matching the price cut is "competitive retaliation." Oligopolistic firms are often cautious about price changes because they anticipate that competitors will respond by matching the price cut, leading to a price war.
In monopoly pricing, what does the monopolist aim to maximize?- a)Price per unit.
- b)Total revenue.
- c)Consumer surplus.
- d)Government subsidies.
Correct answer is option 'B'. Can you explain this answer?
a)
Price per unit.
b)
Total revenue.
c)
Consumer surplus.
d)
Government subsidies.
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Dev Patel answered |
In monopoly pricing, the monopolist aims to maximize total revenue, not necessarily the price per unit. They want to maximize their overall profits.
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