微观经济学---入门压轴题--全英文--john-Sloman-and-Alison-Wride---6.docx

ECONOMICSAnswers to Workshop 6Perfect Competiti onand Mon opoly ECONOMICS It is usual to divide markets into four categories. In ascending order of competitiveness these are (fill in the missing three): Mon opoly Oligopoly Mon opolistic competiti on Perfect competiti on To which of the above four categories do the followi ng apply to the member firms? (There can be more tha n one market category in each case.) Firms face a dow nward slopi ng dema nd curve. Mono poly, oligopoly, mon opolistic competiti on New firms can freely en ter the industry Perfect competiti on, mon opolistic competiti on Firms produce a homoge neous product Perfect competitio n, some oligopolies Firms are price takers Perfect competiti on Firms face an elastic dema nd (but less tha n infin ity) at the profit-maximisi ng output. Mono poly, oligopoly, mon opolistic competiti on Firms will produce where MR = MC if they wish to maximise profits All There is perfect kno wledge on the part of con sumers of price and product quality. Perfect competiti on In which of the four categories would you place each of the following? (It is possible in somecases that part of the in dustry could be in one category and part in ano ther: if so n ame both.) A village post office Restaura nts in large town Banks A village post office Restaura nts in large town Banks Hi-fi manu facturers Producers of barley Water supply Local buses The market for foreig n curre ncy Mon opoly for certa in people and products Mon opolistic competitio n Oligopoly (Oligopoly Perfect competition (or close to it) .Mono poly Mono poly or oligopoly Perfect competition (or close to it) The follow ing diagram shows the cost curves of a firm un der perfect competiti on. ￡ 12 11 10 9 8 7 6 5 4 3 2 1 0 10 2030 4050MC60 70 8090 100Qua ntity0How much will the firm produce in order to maximise profits at a price of ￡per unit? 70 units 10 20 30 40 50 MC 60 70 80 90 100 Qua ntity 0 What will be its average cost of product ion at t