A Firm That Is a Single Seller of an Input

question 156

Multiple Choice

A firm that is a single seller of an input can be expected to behave like a:

• A) duopoly.
• B) oligopoly.
• C) monopoly.
• D) monopsony.

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Definitions:

Rationing Function

The ability of market prices to allocate scarce resources efficiently among competing uses.

Incentive Function

The inducement that an increase in the price of a commodity gives to sellers to make more of it available (and conversely for a decrease in price), and the inducement that an increase in price offers to buyers to purchase smaller quantities (and conversely for a decrease in price).

Loan Period

The duration of time from the initiation of a loan to its final due date, within which the borrower is expected to repay the borrowed amount along with interest.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.