Practice Exam Multiple choice questions. 1) Which of the following statements about natural monopoly is correct? A) A natural monopoly’s average cost is decreasing. B) A natural monopoly’s marginal cost is decreasing. C) A natural monopoly usually has a small fix cost. D) Governments usually want to ban natural monopoly. 2) Which of the following statements about perfect price discrimination is correct? A) A firm in a perfect competitive market can apply perfect price discrimination
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Maximizing Profits in Market Structures Competitive markets‚ monopolies‚ and oligopolies play a big role in the economy. We will be discussing the characteristics‚ price determination‚ output determination‚ barriers to entry‚ and the role in economy of each market structure. In a competitive market there are many firms that supply the same product‚ such as local gas stations. Mankiw (2007) stated‚ “You may recall that a market is competitive if each buyer and seller is small compared to the size
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He stretches it a bit further by making it the relationship between technology and monopolies. With the rise of monopolies‚ there had been opinions that technological changes have put an end to competition and left people with a choice between control of production by private monopolies and direction by the government. (Hayek‚ 91) He analyzes the belief that “the alleged technological cause of the growth of monopoly is the superiority of the large firm over the small‚ owing to the greater efficiency
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which a product has a substitute‚ price‚ entry and exit ease‚ and the level of mutual dependence. These structured variables are classified in the following market structures: perfectly competitive markets‚ monopolistically competitive markets‚ monopolies‚ and oligopolies (Colander‚ 2010). Trader Joe’s is a grocery store that offers upscale grocery fare such as; organic produce‚ nutritional supplements‚ and health foods. Trader Joe’s was founded by Joe Coulombe and started in 1958 as a small
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Duopoly Its similar to the oligopoly but only two producers/sellers control the market. Monopoly A monopoly is a market structure in which there is only one producer/seller for a product. In other words‚ the single business is the industry. Entry into such a market is restricted due to high costs or other impediments‚ which may be economic‚ social or political. For instance‚ a government can create a monopoly over an industry that it wants to control‚ such as electricity. Another reason for the barriers
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Economic theory usually differentiates across the four major types of market structure: monopoly‚ oligopoly‚ monopolistic competition‚ and perfect competition. Although the list of market structures can be virtually unlimited‚ these four types are considered to be the basis for understanding the principles of market performance in different market conditions. Each of the four types of market structures possesses its benefits and drawbacks. In any of these markets‚ an entrepreneur can develop a strategy
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MARKS) 1.EXPLAIN MONOPOLY MARKET WITH PRICING STRUCTURE MONOPOLY Monopoly is the least competitive market structure of all. A pure monopoly is a market with only one producer who produces 100% of the output. Consumers have the least choice in a monopoly market – buy from the monopolist or don’t buy. A monopoly market will have the highest price and the lowest total production of any market structure. The assumptions of monopoly are: One seller: The classic monopoly has only one seller
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industry) behave in terms of pricing‚ supply‚ entry & exit‚ competition and efficiency. Currently‚ there are four types of market structures practiced in the world. These are: 1. Perfect Competition 2. Imperfect or Monopolistic Competition 3. Monopoly 4. Oligopoly These market structures are as a result of the different degrees of competition within the industry. Each structure is differentiated by freedom of entry and exit‚ number of buyers and sellers‚ product differentiation‚ etc. However
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Q.No 1- Inflation is a global Phenomenon which is associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon. Inflation is commonly understood as a situation of substantial and rapid increase in the level of prices and consequent deterioration in the value of money over period of time. It refers to the advantage rise in the general
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retailers whose core competency is not credit cards v. Target - $7.78 B in revenue and 1% market share vi. Others such as Best Buy‚ Macy’s‚ etc B. Competitor Strengths and Weaknesses: Competitor Strength Grid Scenario Analysis: Two most likely are: * Scenario 1: Recent acquisitions do not create added profits * Possible Strategies: * Try to create stronger relationships with customers of the acquired companies who are unfamiliar with Capital One
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