Reading 15 – The Firm & Market Structures

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1、Reading15–TheFirm&MarketStructures©2011CFAInstitute.Allrightsreserved.1.Amarketstructurecharacterizedbymanysellerswitheachhavingsomepricingpowerandproductdifferentiationisbestdescribedas:A.oligopoly.B.perfectcompetition.C.monopolisticcompetition.2.Amarketstructurewithrelativelyfewsellers

2、ofahomogeneousorstandardizedproductisbestdescribedas:A.oligopoly.B.monopoly.C.perfectcompetition.3.Marketcompetitorsareleastlikelytouseadvertisingasatoolofdifferentiationinanindustrystructureidentifiedas:A.monopoly.B.perfectcompetition.C.monopolisticcompetition.4.UpsilonNaturalGas,Inc.is

3、amonopolyenjoyingveryhighbarrierstoentry.Itsmarginalcostis$40anditsaveragecostis$70.Arecentmarketstudyhasdeterminedthepriceelasticityofdemandis1.5.Thecompanywillmostlikelysetitspriceat:A.$40.B.$70.C.$120.5.ThedemandscheduleinaperfectlycompetitivemarketisgivenbyP=93–1.5Q(forQ≤62)andthelon

4、g-runcoststructureofeachcompanyis:Totalcost:256+2Q+4Q2Averagecost:256/Q+2+4QMarginalcost:2+8Q6.Newcompanieswillenterthemarketatanypricegreaterthan:A.8.B.66.C.81.6.Companiesmostlikelyhaveawell-definedsupplyfunctionwhenthemarketstructureis:A.oligopoly.B.perfectcompetition.C.monopolisticcom

5、petition.7.Aquarius,Inc.isthedominantcompanyandthepriceleaderinitsmarket.OneoftheothercompaniesinthemarketattemptstogainmarketsharebyundercuttingthepricesetbyAquarius.ThemarketshareofAquariuswillmostlikely:A.increase.B.decrease.C.staythesame.8.SigmaSoftandThetaTecharethedominantmakersofc

6、omputersystemsoftware.Themarkethastwocomponents:alargemass-marketcomponentinwhichdemandispricesensitive,andasmallerperformance-orientedcomponentinwhichdemandismuchlesspricesensitive.SigmaSoft’sproductisconsideredtobetechnicallysuperior.Eachcompanycanchooseoneoftwostrategies:oOpenarchitec

7、ture(Open):Massmarketfocusallowingothersoftwarevenderstodevelopproductsforitsplatform.oProprietary(Prop):Allowonlyitsownsoftwareapplicationstorunonitsplatform.Dependinguponthestrategyeachcompanyselects,theirprofitswouldbe:TheNashequilibriumforthesecompaniesis:A.proprietar