microyellow3answersfall2011 - Fall 2011 ECO 211...

Fall 2011
ECO 211 – Microeconomics
Yellow Pages
ANSWERS
Unit 3
Mark Healy
William Rainey Harper College
E-Mail: [email protected]
Office: J-262
Phone: [phone]
1

Four Market Models
CHARACTERISTIC PURE
COMPETITION
(Ch. 8-9)
MONOPOLISTIC
COMPETITION
(Ch. 11)
OLIGOPOLY
(Ch. 11)
MONOPOLY
(Ch. 10)
Number of Firms: Very many Many Few One
Type of product: Standardized Differentiated Standardized or
Differentiated
Unique; no
close
substitutes
Control over price: None; they are
price takers;
demand facing
the firm is
perfectly price
elastic
Little; it depends
on product
differentiation
Some, but limited
by mutual
interdependence
Considerable
Conditions of
entry:
Very easy; No
barriers
Relatively easy Significant
barriers
Blocked
Nonprice
competition
None A lot Typically a lot,
especially with
differentiated
products
Public
Relations type
advertising
Examples: Agriculture Retail trade,
Restaurants,
Manufactured
Ice, Plastic Pipe,
Book Publishing.
Automobiles,
cigarettes,
breakfast cereal,
beer, soaps and
detergents,
refrigerators,
roasted coffee,
copper, flat glass
Public utilities:
(gas, electric,
water; Western
Union), Wham-
O (Frisbees),
and the
DeBeers
diamond
syndicate are
"near"
2

monopolies.
3

Quick Quiz – Product Market Models
1. Economists would describe the U.S. automobile industry as:
1. purely competitive.
2. an oligopoly.
3. monopolistically competitive.
4. a pure monopoly.
2. In which of the following market structures is there clear-cut mutual interdependence with
respect to price-output policies?
3. Which of the following industries most closely approximates pure competition?
4. Economists use the term imperfect competition to describe:
5. In which of the following industry structures is the entry of new firms the most difficult?
1. pure monopoly
2. oligopoly
3. monopolistic competition
4. pure competition
6. An industry comprised of 40 firms, none of which has more than 3 percent of the total market
for a differentiated product is an example of:
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