MODULE 5

Question 1

How many businesses are in perfect competition?

Answer 1

Many buyers and sellers

Question 2

What type of product does perfect competition offer?

Answer 2

A standard product

Question 3

Is there easy entry and exit from the industry for perfect competition?

Answer 3

Yes

Question 4

What is an example of perfect competition?

Answer 4

Farming

Question 5

How many businesses are in monopolistic competition?

Answer 5

Many buyers and sellers

Question 6

What type of products does monopolistic competition offer?

Answer 6

Slightly different products

Question 7

Is there easy entry and exit for monopolistic completion?

Answer 7

Yes

Question 8

What is an example of monopolistic competition?

Answer 8

Restaurants

Question 9

How many businesses are in an oligopoly?

Answer 9

A few

Question 10

Is there easy entry and exits for an oligopoly?

Answer 10

No, they are protected by entry barriers

Question 11

What type of product does an oligopoly offer?

Answer 11

Standard or similar products

Question 12

What is an example of an oligopoly?

Answer 12

Automobile manufacturing

Question 13

How many businesses are in a monopoly?

Answer 13

One

Question 14

Is there easy entry and exit for a monopoly?

Answer 14

No, they are protected by entry barriers

Question 15

What type of product does a monopoly offer?

Answer 15

A product with no close substitutes

Question 16

What is an example of a monopoly?

Answer 16

Public utilities

Question 17

What are some entry barriers in oligopolies and monopolies?

Answer 17

Increasing returns to scale, market experience, restricted ownership of resources, legal obstacles (such as patents), market abuses (such as predatory pricing), advertising (most common in oligopolies), brand proliferation, r&d spending, network effect, lock-in effects

Question 18

What is market power?

Answer 18

A business’s ability to affect the price it charges

Question 19

Who has the most market power?

Answer 19

Monopolists

Question 20

Who has the least market power?

Answer 20

Perfect competitors

Question 21

What is the perfect competitors demand?

Answer 21

Has a demand curve different from the market demand curve

Question 22

What way is the perfect competitors demand curve at the prevailing market price?

Answer 22

Horizontal

Question 23

What is average revenue?

Answer 23

The business’s total revenue per unit of output

Question 24

What is marginal revenue?

Answer 24

The total of extra revenue earned when the business sells another unit of output

Question 25

How are revenues for a perfect competitor?

Answer 25

Average revenue equals price, so their average revenue curve is its horizontal demand curve

Question 26

Are marginal revenue and average revenue always equal for a perfect competitor?

Answer 26

Yes

Question 27

What is the profit-maximizing output rule?

Answer 27

Produce at the level of output where marginal revenue and marginal costs intersect. States that profit is maximized when marginal revenue equals marginal cost

Question 28

If marginal revenue exceeds marginal costs, what should happen to output?

Answer 28

Output should be increased

Question 29

If marginal cost exceeds marginal revenue, what should happen to output?

Answer 29

Output should be decreased

Question 30

How can a businesses profit maximizing output be found?

Answer 30

Using a graph, where the MR and MC curves intersect

Question 31

What is the break even point?

Answer 31

If the business is at a profit-maximizing output where price and average cost are equal, the business is making no economic profit and is said to be at its break even point

Question 32

What is the shutdown point?

Answer 32

At the profit-maximizing output where total revenue and variable costs or average variable cost and price are equal, the business reaches its shutdown point. Which occurs at the point of minimum average variable cost

Question 33

What is a perfect competitors supply curve?

Answer 33

Is it’s marginal cost curve above the shutdown point

Question 34

How is perfect competition in the long run?

Answer 34

Entry and exit by business drives a perfectly competitive market to the break even point. Businesses enter markets where economic profits are made so that supply shifts right and price falls. Businesses leave markets where economic losses are made so that supply shifts left and price rises

Question 35

What are the benefits of perfect competition?

Answer 35

Minimum cost pricing and marginal cost pricing

Question 36

Who is Esther Duflo and what did she do?

Answer 36

Has developed projects to encourage the poor to make choices that may be costly in the short run but have the capacity to provide them with significant long term benefits.

Question 37

What are randomized controlled trials?

Answer 37

Mimic the scientific methods employed in laboratory conditions. These trials have been used to test the health related measures, farming methods, bank leading processes, schooling and business startups