Use the Following to Answer Questions

question 22

Multiple Choice

Use the following to answer questions:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Look at the figure Monopoly Profits in Duopoly. Each firm faces an identical demand curve, D₁, and the market demand curve is D₂. The figure illustrates how firms can reap monopoly profits even in an industry with:

• A) free entry and exit.
• B) two firms.
• C) monopolistic competition.
• D) a four-firm concentration ratio of 50.

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Definitions:

Global Market

A market that transcends national borders, encompassing worldwide commerce and trade.

Franchising

A method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.

Licensing

The act of granting permissions to individuals or entities to use patented or copyrighted material, trademarks, or technology owned by another party, under agreed terms and conditions.

Variation

Differences in products, services, or processes that distinguish them from others in the same category.