Micro-Econ

Question 1

Perfect competition (5 characteristics)

Answer 1

1. Large # of ind. buyers / sellers - too small to affect price
2. all firms sell homogeneous product / service
3. resources are completely mobile
4. buyers / sellers have perfect information
5. Gov. does not set price

Question 2

Monopoly (reasons 3)

Answer 2

1. Exclusive control of raw material
2. Gov. grant franchise, include patents
3. Economics of (increasing return) scale.

Question 3

Monopolistic (short -run) Max profit

Answer 3

MR = MC

Revenue from the last unit produced is exactly equal to cost of producing that unit

Question 4

Monopolistic ( 3 characteristics)

Answer 4

1. large number of sellers
2. Close substitutes for product
3. Ease of entry into or exit from market.