reading # 16 - Firm and Market Structure

Question 1

Define perfect competition

Answer 1

many firms produce same product and competition forces to sell at market price

Question 2

Define monopoly

Answer 2

only one firm produces product

Question 3

Define monopolistic competition

Answer 3

many seller and differentiated produces

Question 4

Define Oligopoly

Answer 4

few firms that compete in variety of ways

Question 5

Perfect competition barriers to entry - high or low?

Answer 5

very low

Question 6

perfect competition - what is type of elasticity?

Answer 6

perfectly elastic (horizontal) demand curves b/c no firm large enough to affect mkt price

Question 7

monopolistic demand curve

Answer 7

downward sloping - elastic demand, but not perf because their are diff. in products that give them diff values

Question 8

monopolistic barriers to entry - high or low

Answer 8

low

Question 9

monopoly demand curve

Answer 9

downward sloping - firm sets prices

Question 10

define collusion

Answer 10

“agreement among firms to avoid various competitive practices”

Question 11

“most likely effects on price and output from collusion are”

Answer 11

“price will increase and output will decrease.”