The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 24.1
According to Table 24.1, Gizmo's cannot be:
A)a monopsonist.
B)a monopoly.
C)an oligopolistic firm.
D)a perfectly competitive firm.
E)a monopolistically competitive firm.

Question

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 24.1
 According to Table 24.1, Gizmo's cannot be:
A)a monopsonist. 
B)a monopoly. 
C)an oligopolistic firm. 
D)a perfectly competitive firm. 
E)a monopolistically competitive firm.

Quizplus · Accepted Answer

Gizmo's cannot be a monopoly, as there are other firms in the market. It also cannot be an oligopolistic firm, as there is no information given about the number of firms in the market or their level of interdependence. It cannot be a monopsonist as the table shows the units of output sold, not input purchased. It also cannot be a monopolistically competitive firm, as there is no information provided about the degree of product differentiation. The only remaining option is that Gizmo's is a perfectly competitive firm, where the market determines the price level and the firm is a price taker.

The Following Table Shows the Units of the Output Sold