1) Which of the following is/are characteristics a monopolistic competitive market? (multiple answers possible)
a. Firms are price takers
b. Products of firms are homogenous
c. Firms face a downward sloping demand
d. There are many sellers
e. Entry into the market is easy
f. Firms can make positive profit in the long run
g. Sellers do not react to their rivals’ decision
h. Firms have a constant marginal revenue
2) Which of the following is/are not characteristics of oligopoly market? (multiple answers possible)
a. There are usually small number of firms
b. Firms are price takers
c. Firm’s take their rivals reactions in to account when making key strategic decisions, such as how much to produce
d. Firms have no incentive to advertise
e. Firms face a downward sloping demand
f. Firms have a constant marginal revenue
g. Firms can make a positive profit in the long run
h. Firms can sometimes cooperate and act as a monopolist
3) Which of the following is/are possible outcome(s) of Cartels? (multiple answers possible)
a. Increasing prices
b. Increases quantities supplied in the market
c. Increases the joint profit of its members
d. Helps to avoid price war among rival firms