ECON 2010 FINAL EXAM
QUESTIONS AND ANSWERS
1. In a major metropolitan area, there are many coffee shops, but one chain has
gained a large market share because customers feel its coffee tastes better
than its competitors'.: Number of Firms: Many
Type of Product: Differentiated
1 h/ h
9
, Market Model: Monopolistic competition
2. There are hundreds of high school students in need of algebra tutoring ser-
vices. Dozens of companies offer tutoring services; parents view the quality
of the tutoring at the different companies to be largely the same.: Number of
Firms: many
Type of Product: identical
Market Model: perfect competition
3. In a small town, there are four providers of broadband Internet access: a
cable company, the phone company, and two satellite companies. The Internet
access offered by all four providers is of the same speed. Almost everyone in
the city already has broadband, so any potential new company would have to
engage in a price war with the existing companies and would be unlikely to
cover its costs for years, if ever.: Number of Firms: few
Type of Product: identical
Market Model: oligopoly
4. The government has granted a patent to a drug company for an experimental
AIDS drug. That company is the only firm permitted to sell the drug.: Number
2 h/ h
9
QUESTIONS AND ANSWERS
1. In a major metropolitan area, there are many coffee shops, but one chain has
gained a large market share because customers feel its coffee tastes better
than its competitors'.: Number of Firms: Many
Type of Product: Differentiated
1 h/ h
9
, Market Model: Monopolistic competition
2. There are hundreds of high school students in need of algebra tutoring ser-
vices. Dozens of companies offer tutoring services; parents view the quality
of the tutoring at the different companies to be largely the same.: Number of
Firms: many
Type of Product: identical
Market Model: perfect competition
3. In a small town, there are four providers of broadband Internet access: a
cable company, the phone company, and two satellite companies. The Internet
access offered by all four providers is of the same speed. Almost everyone in
the city already has broadband, so any potential new company would have to
engage in a price war with the existing companies and would be unlikely to
cover its costs for years, if ever.: Number of Firms: few
Type of Product: identical
Market Model: oligopoly
4. The government has granted a patent to a drug company for an experimental
AIDS drug. That company is the only firm permitted to sell the drug.: Number
2 h/ h
9
