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Fall 2025-91354-202590-ECO202-01 - Principles of MicroeconomicsHidden Course

Fall 2025-91354-202590-ECO202-01 - Principles of MicroeconomicsHidden Course

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Which of the following is a likely result of collusion?

more competition

higher prices for consumers

lower profits

increased product variety

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When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are using the strategy of :

limit pricing

interindustry competition

❌

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Mutual interdependence means that each firm in an oligopolistic industry:

makes a product identical to its rivals

❌

faces a perfectly inelastic demand for its product

❌

makes a product similar but not identical to those produced by its rivals

❌

considers the reaction of its rivals when it determines its price policy

✅

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Price leadership occurs when

firms have no market power

❌

the government is forced to get involved with setting prices

❌

firms follow the pricing strategies of a dominant firm

✅

firms compete perfectly

❌

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Entry of new firms in monopolistic competition causes

product differentiation

❌

demand for each firm's products to decrease

✅

economic profits to increase

❌

prices to rise

❌

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A public good is undersupplied/not provided by the private market (firms) because

marginal costs are negative

firms cannot profitably exclude free-riders

100%

excludability reduces private provision incentives

consumers will reveal true willingness to pay

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Please match the following terms:

Competition among producers forces them to use the best technology and right mix of productive resources resulting in_______________

the output of each product at which its marginal cost and price or marginal benefit are equal

A reduction in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service

The difference between the maximum price a consumer is willing to pay for a product and the actual price paid

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A public good can be provided profitably by the private market in large quantities without any government intervention.

Which factor tends to make demand more elastic?

significant amount of income spent on the good

❌

fewer substitutes

❌