1)When is equilibrium reached?

A.When supply is greater than demand

B. When demand equals supply

C. When supply is less than demand

D. When demand and supply both change

2)What are the 3 conditions necessary to achieve a steady-state equilibrium?

3)How do monopoly market structures result in inefficiencies due to the lack of competition from the perspective of innovation?

4)

Which of the following is most likely to act as a barrier to entry in an oligopoly?

a. The profit earned by existing firms in the short run

b. Poorly defined property rights

c. A well-established brand name

d. A high price charged for the products

e. A fall in the output produced by firms

1)Equilibrium is reached B. When demand equals supply

• Market equilibrium is defined as the state where the forces of demand and the forces of supply are equal and balanced. It is the point where there is no surplus or shortage of supply.
• Therefore, market equilibrium is achieved when demand equals supply.

2)The first condition of attaining a steady state equilibrium is the availability of transparent markets. When the markets are transparent, it means that the quantity sold in the market at a specific price is similar to the amount being sold at a particular price. When the buying price and selling price are identical, it becomes easier to ensure consistency in equilibrium.

Secondly, the behavior of the agents influencing the steady state equilibrium should be consistent. This implies that any factor that has been previously applied to enhance equilibrium should be used frequently to ensure that the equilibrium is also steady.

Lastly, a dynamic process should be involved because it will ensure consistency and progress. For an equilibrium to have a steady state, a dynamic process will ensure consistency and improvement in stability.

3)The defining characteristic of a monopoly is that only a single firm exists in it. This means that the existing firm faces no competition. As there is no competition, there is no incentive for the firm to create a better product and innovate. Also, as there is no competition, there is no need to innovate in the production department and bring down the costs of production.

When firms innovate their products and their production methods, there is a cost involved as research is expensive. Monopolies do not want to incur this cost as there is always a chance that the innovation fails. As there is no real pressure to innovate, there is no incentive to take part in innovative research.

4)

c. A well-established brand name

The oligopoly firms are very small in numbers, so they have settled themselves on the heights of good and well-renowned brands. In this scenario, if any new firm gets entered into the market, then that new firms cannot beat the renowned image of the oligopoly firm. Hence, it could be said that it would be reflected as a barrier to entry.