Question

When the existing firms in a monopolistically competitive industry earn above-normal profit: A. New firms enter...

When the existing firms in a monopolistically competitive industry earn above-normal profit:
A. New firms enter into the market, and entry continues until firms earn normal profit
B. New firms have an incentive to enter the market but are legally barred from doing so.
C. Their cost structure automatically changes. Eliminating the additional profit.
D. New firms have no incentive to enter the market.
E. They increase their production and lower the price level

Which of the following is a characteristic of an oligopoly market?
A. Barriers to entry does not exist in an oligopoly market
B. There are many firms in an oligopoly market hence a firm cannot influence the market place
C. Each firm in an oligopoly market can take independent pricing and output decisions.
D. In an oligopoly market, each firms pricing and output decisions depend on those of its rivals
E. Firms in an oligopoly market always manufacture differentiated products
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans:

1) Option A

New firms enter into the market, and entry continues until firms earn normal profit

In the short run monopolistically competitive firms earn economic profit.However entry of new firms ensures that a typical monopolistically competitive firms earn a normal profit.

2) Option D

In an oligopoly market, each firms pricing and output decisions depend on those of its rivals

One of the characteristic of oligopoly market is that mutual interdependence exist.It means  actions of one firm has a major impact on the other firms in the industry.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following is most likely produced in a monopolistically competitive market? a. Automobiles b....
Which of the following is most likely produced in a monopolistically competitive market? a. Automobiles b. Wheat c. Oil d. Fast food e. Soybeans Oligopolists are more sensitive to the pricing and output policies of their rivals when: a. there are many firms in the industry. b. all firms produce identical products. c. there are barriers to entry. d. there is freedom of entry and exit. e. their products are highly differentiated. It is harder to explain the behavior of...
The automobile industry is an example of a(n): a. monopolistically competitive market because firms in the...
The automobile industry is an example of a(n): a. monopolistically competitive market because firms in the automobile industry face an upward-sloping demand curve. b. monopolistically competitive market for legal reasons. c. oligopoly for legal reasons. d. monopolistically competitive market because it experiences economies of scale. e. oligopoly because each firm must produce a large amount of output before it can achieve low average costs.
If firms in a perfectly competitive industry are making zero economic profit, then a some of...
If firms in a perfectly competitive industry are making zero economic profit, then a some of those firms will leave the industry because firms cannot persistently go without making economic profit. b new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. c there is no incentive for either entry or exit. d some of the firms will temporarily shut down. e The supply curve shifts to...
2. If perfectly competitive firms earn economic profit in the short run, then we would expect...
2. If perfectly competitive firms earn economic profit in the short run, then we would expect that in the long run Multiple Choice supply will decrease. existing firms will leave the market demand will decrease. new firms will enter the market. 3. Which of the following is consistent with a perfectly or monopolistically competitive market? Multiple Choice marginal revenue lower than price for each firm exit of small firms when profits are high for large firms a small number of...
Assume a competitive industry is in long-run equilibrium and firms in the industry are earning normal...
Assume a competitive industry is in long-run equilibrium and firms in the industry are earning normal profits. Now assume that production technology improves such that average total costs decline by $5 per unit. How will the industry move to a new long-run equilibrium? a. The fall in costs will result in economic profits and firms will enter the market causing the price to fall until all firms only have normal profits. b. The new long-run equilibrium will be where each...
1) A market that has a single supplier of a product with no close substitutes and...
1) A market that has a single supplier of a product with no close substitutes and barriers to entry is a) an oligopoly. b) monopolistically competitive. c)a pure monopoly. 2) Barriers to entry: Group of answer choices a) guarantee that a firm will always earn positive economic profit. b) cannot be maintained in the long run because other firms will always find a way to enter a profitable industry. c) are obstacles that make it impossible or unprofitable for new...
1. The concentration ratio for an industry with four firms shows the: a) total market capitalization...
1. The concentration ratio for an industry with four firms shows the: a) total market capitalization of the four firms. b) percentage of profits accounted for by the four firms. c) percentage of sales accounted for by the four firms. d) total costs of production of the four firms. e) total quantity of output of the four firms. 2. When the four-firm concentration ratio is less than 40 percent, we can conclude that: a) the industry is monopolistically competitive. b)...
1. A distinguishing characteristic of monopolistically competitive market is A. price discrimination B. differentiated products C....
1. A distinguishing characteristic of monopolistically competitive market is A. price discrimination B. differentiated products C. having long-run economic profits D. having short-run economic losses 2. The Nash equilibrium in a duopoly market would result in A. An equilibrium price higher than the "monopoly price" but a lower equilibrium quantity compared to the " monopoly quantity" B. An equilibrium price higher than a competitive price but a lower equilibrium quantity compared to a monopoly quantity C. an equilibrium quantity higher...
13-For the perfectly competitive broccoli producers in California, the FIRM’s demand curve for broccoli is a...
13-For the perfectly competitive broccoli producers in California, the FIRM’s demand curve for broccoli is a horizontal line. downward sloping. nonexistent. upward sloping. Flag this Question Question 14 A firm maximizes its profit by producing the amount of output such that marginal revenue equals marginal cost. revenue exceeds marginal cost. revenue is maximized. cost is minimized. Flag this Question Question 15 For a perfectly competitive firm, the shutdown point (the point at which it is better to quit operating rather...
1) All other things equal, firms with __________ will not change prices very often. low menu...
1) All other things equal, firms with __________ will not change prices very often. low menu costs high menu costs price leadership large network effects market power 2)If new firms enter a monopolistically competitive industry, what happens to the demand for the product made by an existing firm? demand will become more inelastic demand will become perfectly elastic demand will increase and become more elastic demand will decrease and become more elastic 3) What is a characteristic seen in both...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT