A. there are too many firms in the market and market efficiency could be increased if firms exited the market
B. the number of firms in the market is optimal and the market is efficient
C. There are too few firms in the market and market efficiency could be be increased with additional entry
D. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.
Related Mcqs:
- Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals ?
A. marginal revenue and then use the demand curve to determine the price consistent with this quantity
B. average total cost and then use the supply curve to determine the price consistent with this quantity
C. marginal revenue and then use the supply curve to determine the price consistent with this quantity
D. average total cost and then use the demand curve to determine the price consistent with this quantity - Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?
A. at the efficient scale and charge a price equal to marginal cost
B. at the efficient scale and charge a price above marginal cost
C. With excess capacity and charge a price above marginal cost
D. With excess capacity and charge a price equal to marginal cost - Suppose an industry emits a negative externality such a pollution and the possible methods to internalize the externality are command-and-control policies, pigovian taxes, and tradable pollution permits. If economists were to rank these methods for internalizing a negative externality based on efficiency ease of implementation and the incentive for the industry to further reduce pollution in the future, they would probably rank them in the following order (from most favored to least favored) ?
A. Pigouvian taxes, command-and-control policies, tradable pollution permits.
B. tradable pollution permits, Pigouvian taxes, command-and-control policies
C. tradable pollution permits command-and-control policies, Pigovian taxes.
D. command-and-control policies, tradable pollution permits, Pigovian taxes.
E. They would all rank equally high because the same result can be obtained from any one of the policies - Which of the following is not a characteristic of a monopolistically competitive market ?
A. free entry and exit
B. long run economic profits
C. many sellers
D. differentiated products - Which of the following products is least likely to be sold in a monopolistically competitive market ?
A. breakfast
B. cotton
C. video games
D. beer - In the short run, if the price is above average total cost in a monopolistically competitive market, the firm makes ?
A. losses and firms exit the market
B. profits and firms exit the market
C. losses and firms enter the market
D. profits and firms enter the market - In monopolistic competition of firms are making abnormal profit other firms will enter and ?
A. The marginal cost will shift outwards
B. the demand curve will shift inwards
C. The average cost will shift downwards
D. The average variable cost will increase - A monopolistically competitive firm that is incurring a loss will produce as long as the price that the firm charges is sufficient to cover ?
A. marginal costs
B. fixed costs
C. variable costs
D. advertising costs - A firm in a monopolistically competitive industry ?
A. sells a fixed amount of output regardless of price.
B. must raise price to sell more output
C. can sell an infinite amount of output at the market-determined price
D. must lower price to sell more output. - In a competitive labour market firms will hire labour up to the point where the marginal revenue product of labour equals ?
A. total labour cost
B. the marginal product
C. the price of the product
D. the wage rate
