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Question
Macroeconomics
Posted 10 months ago
Which of the following lists shows the types of market ordered from highest to lowest market quantity?
Choose 1 answer:
(A) perfect competition, monopoly, oligopoly
(B) monopoly, perfect competition, oligopoly
(C) monopoly, oligopoly, perfect competition
(D) perfect competition, oligopoly, monopoly
(E) oligopoly, perfect competition, monopoly
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Answer from Sia
Posted 10 months ago
Solution
a
Market Quantity and Market Types: Market quantity is typically highest in market structures where there are many firms and competition is high. In perfect competition, there are many firms, and each has a small market share. In a monopoly, there is only one firm that controls the entire market. Oligopoly falls in between, with a few firms that have significant market shares
b
Order of Market Types by Quantity: Given the nature of competition in each market type, we can infer that perfect competition would have the highest market quantity due to the large number of firms and competitive pricing. Monopoly would have a lower market quantity because the single firm has control over the price and can restrict output to maximize profits. Oligopoly would have a market quantity higher than monopoly but lower than perfect competition due to limited competition among the few firms
Answer
(A) perfect competition, monopoly, oligopoly
Key Concept
Market Quantity in Different Market Structures
Explanation
Perfect competition typically results in the highest market quantity due to the large number of firms and competitive pricing, followed by oligopoly with fewer firms and some price-setting power, and finally monopoly with the lowest quantity due to a single firm controlling the market and setting prices to maximize profits.
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