PLEASE ANSWER ALL QUESTIONS 1. If firms in an industry differentiated their prod
ID: 1219788 • Letter: P
Question
PLEASE ANSWER ALL QUESTIONS
1. If firms in an industry differentiated their products and made economic profits in the short-run, what other characteristic would be important to determine if this is an oligopoly or a monopolistically competitive market?
A) the number of close substitutes for the good being produced
B) the number of firms in the market
C) the number of buyers in the market
D) if the good being sold is a normal or inferior good
2. The small town of Narberth has two pizza stores. Which of the following statements are correct?
I.The profits of each store depend on the price of the pizza at the other store.
II.Both stores would increase their profit if they cooperated in setting their prices.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
3. In what type of market is a cartel possible?
A) a market in which there are many firms
B) a market in which firms sell a homogeneous good
C) a market in which firms sell a differentiated good
D) a market in which there are only a few firms and barriers to entry exist
Explanation / Answer
1. the number of close substitutes for the good being produced.
2. Both I and II are true because if the price of pizza in one store falls, then all the consumers will got to that place and no one will visit the other place so both stores should cooperate in order to make profits.
3. cartel exists in a market in which there are only a few firms and barriers to entry exist
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