Firm Types

Question 1

What are the characteristics of a Monopoly Firm?

Answer 1

1. One firm
2. Products with no close substitutes
3. Price Setters
4. Barrier to entry (legal, economies to scale)
5. Goodwill Advertising

Question 2

What are the characteristics of a Perfectly Competitive Firm?

Answer 2

1. Many firms
2. Price Takes
3. Homogenous Product
4. Non-price Competition
5. Easy to enter/exit

Question 3

What are the characteristics of a Oligopoly Firm?

Answer 3

1. Few firms dominate industry
2. Barriers to entry
3. Homogenous or Differentiated products

Question 4

What conditions must prevail for a firm to practice price discrimination?

Answer 4

1. Firm must be a price setter
2. Must be able to segment to market
3. Market must be sealed