Econ Test 3

Question 0

Monopolistic Competition

Answer 0

• many firms
• differentiated product
• some control over price
• relatively easy conditions of entry
• emphasis on name,brands,and trademarks

Question 1

Pure Competition Characteristics

Answer 1

-very large number of firms
-standardized product
-no control over price
-very easy to enter
Ex.agriculture

Question 2

Pure Monopoly

Answer 2

-one firm
-unique product with no close subs
-considerable control over price
-blocked entry
-mostly public relations advertising
Ex.local utlilties

Question 3

Allocative efficiency

Answer 3

The appointment of resources among firms and industries to obtain the production of the products most wanted by society(consumers)

• output at marginal cost and price are equal
• consumer and producer surplus is maximized

Question 4

Productive Efficiency

Answer 4

The production of a good in a least costly way

-takes place where atc is a minimum and marginal product is the same for all inputs

Question 5

Principle 8

Answer 5

Markets are an efficient way to organize

Question 6

Principle 9

Answer 6

Sometimes government action is necessary to improve market outcomes

Question 7

Product differentiation

Answer 7

1) quality differences
2) additional services
3) location
4) promotion and packaging

Question 8

Cons of monopolistic competition

Answer 8

1) unnecessary advertising costs
2) wasteful product differentiation
3) anti-competitive business practices