Question

The benchmark for how efficient a market is would be the

pricing and output levels under monopolistic competition.

pricing under perfect competition, but the output under monopoly.

marginal cost pricing and output levels under perfect competition.

pricing and output level associated with monopoly.

pricing and output level associated with oligopoly.

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问题 103 分

In a perfectly competitive, constant-cost industry, a increase in demand will cause the short run price to ________, and the long run price to ________.

rise; return to the original price

rise; rise

fall; return to the original price

remain constant; fall

fall; fall

Answer 1

1. Option C is correct.

In this market structure, since both the buyers and the sellers have complete information and the goods sold are homogeneous, so no price above the marginal cost can be charged. At this price, the output in the market is at its optimal level.

2. Option A is correct.

An increase in demand increases the price of the goods sold in the market in the short run, giving rise to positive economic profits. More firms enter the market to share the profit. The price fall because of competition until all profit is coompeted away, and the long run price returns back to its original price.