Question

17. In economics, a firm that faces no competitors is referred to as an oligopoly

True or False

18.

City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below.

Quantity (Millions of therms)	Price ($ per therm)	Total Cost(million $)
1	48	35
2	44	64
3	38	90
4	30	113
5	20	133
6	8	150

The marginal cost of going from a production of 5 million therms to a production of 6 million therms is

a. 133 Million

b. 150 Million

c. 20 Million

d. 17 Million

19. . ______________________ precisely describes a situation where a third party, outside the transaction, suffers From a market transaction by others.

a. A market failure

b. Negative externality

c. Positive externality

d. A spillover

20. Firms in a monopolistic competition make positive economic profit in the long run.

True or False

Answer 1

17) A firm having no competitor is called a monopoly whereas an oligopoly market has few sellers.

Hence the statement is false.

18) MCn = TCn - TCn-1

=> MCn  = $(150 - 133)million = $17 million

hence option D.

19) correct option is B i.e. negative externality because of its definition.

20) The statement is false as monopolistic competition has features of both monopoly and perfectly competitive market. Hence, free entry and exit are possible here. hence in the long-run they can only earn normal profit i.e zero economic profit.