Changes

2. Order the types of industries from those having the lowest price (due to the greatest competition) to those having the highest price (due to the least competition).

2. Order the types of industries from those having the lowest price (due to the greatest competition) to those having the highest price (due to the least competition).

1. Perfect Competition (MC=MR at a lower point P, where P=ATC)

1. Perfect Competition (MC=MR at a lower point P, where P=ATC)

2. Perfectly Contestable Markets  

2. Perfectly Contestable Markets  

3. Monopolistic Competition  

3. Monopolistic Competition  

4. Oligopoly  

4. Oligopoly  

5. Cartel  

5. Cartel  

6.  Monopoly (MC=MR is how the price is determined)  

6.  Monopoly (MC=MR is how the price is determined)  

3. Explain which specific type of industry (e.g., oligopoly or something else) each of these quotes probably refers to: (1) "She's the finest hair stylist in town; no one has her special style!", (2) "Crazy Eddie ... his low prices are INSANE!", (3) "Don't like his prices? He's the only one in town selling what you need."  

3. Explain which specific type of industry (e.g., oligopoly or something else) each of these quotes probably refers to: (1) "She's the finest hair stylist in town; no one has her special style!", (2) "Crazy Eddie ... his low prices are INSANE!", (3) "Don't like his prices? He's the only one in town selling what you need."  

1. Monopolistic Competition

1. Monopolistic Competition

2. Perfect Competition

2. Perfect Competition

3. Monopoly

3. Monopoly

4. List how monopolies can be established.  

4. List how monopolies can be established.  

1. Government sometimes create monopolies by operation of law

1. Government sometimes create monopolies by operation of law

2. The licensing of professionals creates a barrier to entry

2. The licensing of professionals creates a barrier to entry

3. Control of a valuable resource can also create a monopoly.

3. Control of a valuable resource can also create a monopoly.

4. Economies of scale can create a monopoly by rewarding the biggest company with the lowest average cost

4. Economies of scale can create a monopoly by rewarding the biggest company with the lowest average cost

5. Government grants of monopoly such as patents and copyrights

5. Government grants of monopoly such as patents and copyrights

5. What prevents a monopoly from increasing its prices without limitation?  

5. What prevents a monopoly from increasing its prices without limitation?  

The Law of Demand. When the price increases, demand decreases.

The Law of Demand. When the price increases, demand decreases.