Exam 6: Market Structure

The market environment heavily influences corporate decision-making ability. Discuss the differences in executive decisions concerning pricing, product design, and advertising between a company that exists in a perfectly competitive market and a company that lives a monopolistically competitive market.

In a perfectly competitive market, the price that the firm faces from supply and demand is also equal to:

Elmer's Glue has captured the market for school glue. It is preferred by both students and parents alike. It takes very little capitalization to enter the market but nobody successfully does. The glue clearly needs no patents or secret formulas. This type of market is called:

Recently American Airlines started charging $15 for each checked baggage. Why did the company simply not charge $15 to $20 more per ticket, and quietly avoid this publicity?

In a monopolistically competitive market, the seller maximizes profits by:

The market for micro-computers (PCs) is fairly competitive, the products are somewhat homogeneous, and, over time, firms have entered looking to make profits on new configurations of the micro-computer. Over time, profits:

Duds is a new laundry detergent trying to break into the market. What might be its big problem?

The key to the importance of the marginal cost curve of a company is that it is its:

For the perfectly or purely competitive firm, profit maximization occurs at an output level where:

A market where a few firms produce most of the output or sales is called:

In a purely competitive market, a company selling in the market views its demand curve as:

While very few markets are 'purely competitive' according to the strict economics definition, market analysts often use competition as the:

Always Round Tire has been in the tire business since 1963. They have several plants with different levels of technology. They are organized by the United Rubber Workers union. Over the years, the company has worked with its employees to figure out how to produce a tire for less. This incumbent advantage over potential newcomers is the:

Explain why OPEC cannot always maintain the high price of oil by restricting production?

If a firm is earning a large economic profit and the firm operates in a fairly competitive market, then, over time:

In the Cournot equilibrium, the price that each firm accepts is:

Always Round Tire is the only producer of tires for the new British import, the Maxi Copper. Demand for a set of four tires is P = 800 - 5Q while the costs to Always Round are: MC = 15Q. What would be the monopoly price and quantity? What would happen to price and quantity if the market were perfectly competitive (assuming the same costs)?

Economists tend to focus on one structural aspect of market organization that is more important than the others. It is:

Two firms agree to set a single high price for their products, and reap high profits. What is the problem here?

In the Cournot equilibrium, each firm assumes that the other's ______ is/are being held constant.