In a Large Metropolitan Market, It Is Relatively Easy to Set

question 106

Multiple Choice

In a large metropolitan market, it is relatively easy to set up a law office. The ease of entry explains why you will find hundreds of lawyers listed in the Toronto phone book. Each lawyer is a close substitute for another but with slight differences. Which of the following market structures best describes the one in which lawyers operate?

• A) monopolistic competition
• B) pure competition
• C) oligopoly
• D) perfect monopoly

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Definitions:

Annual Profit

The total earnings a company makes in one fiscal year after all expenses and taxes have been subtracted from its total revenue.

Nash Equilibrium

A concept within game theory where each player's strategy is optimal when considering the decisions of other players, leading to a situation where no participant can gain by unilaterally changing their strategy.

Duopolists

Two firms or parties that dominate the market for a particular product or service.

Output Maximization

Output maximization refers to a strategy employed by firms to adjust their production in order to produce the maximum number of goods or services, given their resources.