If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then
A) a shortage will exist.
B) a surplus will exist.
C) producer surplus is maximized.
D) consumer surplus is maximized.
A
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What characteristic of monopolistic competition may help to offset the inefficiency of this market structure?
A) Free entry and exit imply that firms produce at minimum long-run average cost. B) Consumers may value the product diversity that allows them to choose from a wide variety of differentiated products. C) Consumers may feel better about the inefficiency if they know that firms earn zero profits. D) Consumers may prefer this outcome to monopoly or monopsony.
Which of the following is NOT a common characteristic of oligopoly?
A) strategic dependence among firms in the industry B) product differentiation C) barriers to entry D) marginal cost pricing.