Market Structure and Market Power

Which of the following is NOT true about imperfect competition? a. Greater product differentiation decreases market power. b. A smaller number of sellers in a market increases market power. c. Imperfect competition among buyers gives them bargaining power. d. Sellers with market power can use independent pricing strategies

A) Greater product differentiation

A characteristic of monopolistic competition that is not present in any other market structure is that there a. is only one seller and that seller holds a high level of market power. b. are many sellers and each produces its own version of the product. c. are a small number of sellers who have market power. d. are many sellers that produce identical products.

B) are many sellers and each produces its own version of the product

Based on the Rational Rule for Sellers, how does a manager set price and quantity? If the company has no market power, the marginal cost _____ price. If the company has market power, the marginal cost is _____ than price a. is less than; greater b. is greater than; less c. equals; less d. equals; greater

C) equals; less

Which of the following conditions is present for all sellers in a perfectly competitive market? a. All sellers have an equal and high level of market power. b. The product price varies across the sellers. c. The number of sellers is small. d. All sellers are selling identical products.

D) All sellers are selling identical products

When a seller has a high level of market power, the seller a. produces a product that is identical to the output of other companies in the market. b. is in a market with growing demand. c. is one of many sellers selling in its market. d. can raise its price without losing many customers.

D) can raise its price without losing many customers

(Figure: Output Level) According to the rational rule, what output and price should the firm in the following example choose? (Look at graph) a. quantity = 6; price = $6.00 b. quantity = 4; price = $4.00 c. quantity = 8; price = $9.00 d. quantity = 4; price = $7.00

D) quantity = 4; price = $7:00

In which of the following situations would Maria's Doughnut Shop have the LEAST market power? a. Within three miles, there are five other doughnut shops and three bakeries that sell breakfast pastries. b. There are two rival doughnut shops within three miles but no other bakeries. c. The closest doughnut shop is 10 miles away, but there is a bakery with breakfast pastries two miles away. d. The closest doughnut shop or bakery is 25 miles away from Maria's shop

A) within three miles, there are fie other doughnut shops and three bakeries