Competition Concepts

question 47

Short Answer

Competition Concepts. Indicate whether each of the following statements is true or false and why.
A. A high ratio of distribution cost to total cost tends to increase competition by widening the geographic area over which any individual producer can compete.
B. The price elasticity of demand will tend to fall as new competitors introduce substitute products.
C. Equilibrium in monopolistically competitive markets requires that firms be operating at the minimum point on the long-run average cost curve.
D. An increase in product differentiation will tend to decrease the slope of firm demand curves.
E. A perfectly functioning cartel would achieve the perfectly competitive industry price-output combination.

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Definitions:

Extrinsic Motivation

Motivation that is driven by external rewards such as money, fame, grades, and praise.

Reward

An outcome or event that strengthens the likelihood of a behavior by providing a positive consequence or satisfaction to the subject.

Intrinsic Motivation

Motivation driven by an interest or enjoyment in the task itself, rather than relying on external pressures or rewards.

Extrinsic Motivation

The drive to perform actions or engage in activities due to external rewards or pressures rather than for intrinsic satisfaction.