Economics - Economics Section 1
- Option : B
- Explanation : The dominant company’s market share tends to decrease as profits attract entry by other companies.
27. In first degree price discrimination the seller is able to capture:
- Option : C
- Explanation : In first degree price discrimination the seller is able to capute all of the consumer surplus.
- Option : B
- Explanation : Economies of scale and regulation may sometimes make monopolies more efficient than perfect competition.
29. If a monopoly is regulated by the government, it will least likely base its prices on:
- Option : C
- Explanation : Government regulation may attempt to improve resource allocation by requiring the monopolist to institute average cost pricing or marginal cost pricing. The monopolist will least likely be allowed to institute first degree price discrimination.
30. Which of the following statements is most accurate?
- Option : A
- Explanation : Under an oligopolistic pricing strategy, competitors will not follow a price increase but will cut their prices in response to a price decrease by a competitor. Hence the demand curve is kinked.
