Exam 11: Profit Maximisation Under Perfect Competition and Monopoly

What are the main disadvantages and advantages of monopoly?

What are contestable markets?

Perfect competition exists in an industry that contains many relatively small firms producing identical products with profit- maximising prices equal to the respective marginal costs of products.

For a firm to be a natural monopoly, economies of scale must be realised at a scale that is close to total demand in the market.

A firm in long- run equilibrium is also in short- run equilibrium.

Concentration ratios are a good guide to the degree of competition when an industry competes with overseas suppliers.

What is the connection between perfect competition and the public interest?

The efficient regulatory solution for a natural monopoly is to set price equal to average cost and allow the monopolist to earn a normal return.

Under contestable theory, it is not the number of firms that is the most important factor.

Why is perfect competition incompatible with achieving substantial economies of scale?

Which of the following statements does not refer to a characteristic of a perfectly competitive industry?

What is 'hit and run' competition?

Under perfect competition, super profits are competed away in the long run because

E- commerce is bringing more___________to the marketplace.

What is supernormal profit?

The following diagram shows a perfectly competitive industry and firm. The position shown is not a long- run equilibrium because

Assume the wool industry is a perfectly competitive industry. Why is it difficult for a wool producer to make excess profits as implied by the assumptions of perfect competition?

For a natural monopolist, fixed costs are very , while marginal costs are relatively

Which of the following is least likely to be considered a firm in an imperfectly competitive industry?

Monopolies may become inefficient without competitive pressure resulting in higher costs. This is sometimes called