PCE 9 2023 Exam Questions with Complete Solutions

PCE 9 2023 Exam Questions with Complete Solutions two types of market models that closely approximate many markets in the real world are - ANSWER monopolistic competition and oligopoly a(n) _oligopoly_ is a market dominated by a few large producers of a homogeneous or differentiated product - ANSWER oligopoly when plant and equipment are underutilized because firms are producing less than the minimum- ATC output, this is known as having _productive inefficiency_ _excess capacity_. - ANSWER productive inefficiency excess capacity which of the following is a characteristic of monopolistic competition? - ANSWER differentiated products if a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firm - ANSWER should produce less output to increase profits or reduce losses the equality or price and minimum average total cost yields technical _productive_ efficiency; the equality of price and marginal cost yields _allocative_ efficiency - ANSWER productive, allocative monopolistic competition normally consist of 25 to 75 firms rather than hundreds or thousands and involves which of the following characteristics? - ANSWER no collusion small market shares independent action the demand curve for a monopolistically competitive firm is - ANSWER downward-sloping firms in oligopolistic industries are " price makers" because - ANSWER they are few in number entry of new firms into monopolistically competitive industries is relatively easy because - ANSWER capital requirements are low