In the 1960s,each Firm in the Computer Industry Was Able

question 110

Multiple Choice

In the 1960s,each firm in the computer industry was able to make extremely large profit margins,some as high as 50 to 60 percent.The margin decreased to 20 to 40 percent in the 1970s and to 10to 20 percent in the 1980s.We conclude that:

• A) market power increased in the two decades.
• B) the industry evolved from oligopolistic to a more competitive industry in the two decades.
• C) lower profit margins were due to the government's regulation to protect consumers.
• D) lower profit margins were largely due to the mismanagement of computer firms.

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Definitions:

Productively Efficient

Refers to a situation where goods and services are produced at the lowest possible cost, and resources are utilized in the most efficient manner.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information, allowing no single firm to influence the market price.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Socially Optimal

A condition or point where the social welfare, including both consumer and producer welfare, is maximized, often considered in the analysis of market efficiency and interventions.