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perfect competition and monopolistic competition

13. If an oligopolistic firm decides to raise its price.
A. other firms will automatically follow
B. none of the other firms will follow
c. other firms may follow if it is the price leader
D. only some of the firms will follow

14. The main difference between perfect competition and monopolistic competition is
A. the number of sellers in the market
B. the ease of exit from the market
C. the degree of information about the market price
D. the degree of product differentiation

15. Prices under an ideal cartel situation will be equal to
A. monopoly prices
B. competitive prices
C. prices under monopolistic competition
D. marginal cost

16. Price discrimination exists when
A. two different sellers charge different prices for the same product
B. one company sells identical products in different markets at different prices
C. the ratio of price to marginal cost differs for similar products
D. both B and C

17. If a product which costs $8 is sold at $10, the mark-up is
A. $2
B. 25%
C. 20%
D. none of the above

18. In finance, risk is most commonly measured by
A. the probability distribution
b. the standard deviation
C. the average deviation
D. the square root of the standard deviation

Solution Preview

13. If an oligopolistic firm decides to raise its price.
A. other firms will automatically follow
B. none of the other firms will follow
c. other firms may follow if it is the price leader
D. only some of the firms will follow

An oligopoly is a market form in which a market is dominated by a small number of sellers

(oligopolists). Because there are few participants in this type of market, each oligopolist

is aware of the actions of the others. The decisions of one firm influence, and are

influenced by, the decisions of other firms. Therefore, when an oligopolistic firm decides

to raise its price other firms will automatically follow.

14. The main difference between perfect competition and monopolistic competition is
A. ...

Solution Summary

Questions about perfect competition and monopolistic competition are presented.

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