Question 1. What is the difference between pure competition and monopolistic competition?
slight as the conditions for each are quite similar.
under pure competition there are many sellers and the product is homogeneous
while there many sellers, there is some differentiation in the product
not as great as there are with an oligopoly
Question 2. The relevant market structure under deregulation is described by a theory which substitutes potential competition for the active participation of many sellers. What is this theory called?
the law of supply and demand
marginal utility
monopolistic competition
contestable markets
Question 3. How is the Relevant Market Structure in transportation described?
by comparing fixed costs with variable costs
by determining all the areas which the carrier can serve effectively
by generally describing all possible origin and destination points for each commodity
by identifying the relevant market area for one commodity moving between two points
Question 4. This type of rate applies to or from whole regions, rather than points.
joint rates
local rates
group rates
incentive rates
Question 5. What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach?
Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means.
Motor carriers are structured such as to make allocation extremely difficult.
Rail carriers have difficulty defining their common costs as they have wide spread geographic operations
All transport firms have significant difficulty with cost concepts due the very nature of their operations
Question 6. There are two separate concepts in Cost of Service pricing. They are:
head haul, back haul and extent of competition
commodity and density
prices based on average or marginal cost
competition and direction of travel
Question 7. What is the status of competition within the motor carrier industry?
Only carriers of the same type compete against each other such LTL versus LTL or TL versus TL carriers.
For hire carriers only compete against private carriers
The industry is highly competitive with competition between all carriers as well as with firms such as United Parcel Service and FedEx
Truckload carriers only compete with contract carriers
Question 8. What is a skimming price?
a price meant to skim off the most profit able traffic
a means to maximize profit until competitors enter the market
a price which allows a carrier to enter a new market.
which allows the carrier to transport only that traffic of the shipper that the carrier feels to be profitable.
Question 9. LTL carriers must make the same type of equipment decisions as TL along with deciding:
what commodities to haul
where to deploy this equipment
line haul versus PUD
what color to paint the trucks
Question 10. Turning back to figure 4.1 which of the following is not a simplifying assumption?
firm's products or services are homogeneous
only one group of customers
there are cost which are not the responsibility of the customer
the firm possess some monopolistic power