Market Structures

Question 1

What are the four main types of market structures in economics?

Answer 1

Perfect competition, monopolistic competition, oligopoly, and monopoly.

Question 2

True or False: In a perfect competition market, there are many buyers and sellers.

Answer 2

True.

Question 3

Fill in the blank: A market structure characterized by a single seller is known as a __________.

Answer 3

monopoly.

Question 4

What is a key characteristic of monopolistic competition?

Answer 4

Product differentiation.

Question 5

In which market structure do a few firms dominate the market?

Answer 5

Oligopoly.

Question 6

True or False: In perfect competition, firms have market power.

Answer 6

False.

Question 7

What type of market structure features identical products?

Answer 7

Perfect competition.

Question 8

What is the primary goal of firms in a monopoly?

Answer 8

Maximizing profits.

Question 9

Which market structure is characterized by a downward sloping demand curve for the firm?

Answer 9

Monopoly.

Question 10

True or False: In an oligopoly, firms are interdependent.

Answer 10

True.

Question 11

Fill in the blank: __________ refers to the situation where many firms sell products that are similar but not identical.

Answer 11

Monopolistic competition.

Question 12

What is the main feature of a monopoly that differentiates it from other market structures?

Answer 12

The absence of close substitutes for its product.

Question 13

In which market structure do firms compete on price and non-price factors?

Answer 13

Monopolistic competition.

Question 14

What is one potential disadvantage of monopolies for consumers?

Answer 14

Higher prices and reduced output.

Question 15

Which market structure has the highest barriers to entry?

Answer 15

Monopoly.

Question 16

True or False: Firms in perfect competition can freely enter and exit the market.

Answer 16

True.

Question 17

What is the term for a market with no barriers to entry or exit?

Answer 17

Perfect competition.

Question 18

Fill in the blank: In __________, firms may engage in price wars to gain market share.

Answer 18

Oligopoly.

Question 19

What is a common example of an oligopoly?

Answer 19

The automobile industry.

Question 20

True or False: In monopolistic competition, firms are price takers.

Answer 20

False.

Question 21

What is the primary characteristic of products in an oligopoly?

Answer 21

They may be homogeneous or differentiated.

Question 22

In which market structure do firms have some degree of market power?

Answer 22

Monopolistic competition and monopoly.

Question 23

What is the key feature of a perfectly competitive market?

Answer 23

No single firm can influence the market price.

Question 24

Fill in the blank: A __________ is a market structure where a few large firms dominate the industry.

Answer 24

oligopoly.

Question 25

What is a characteristic of monopolistic competition?

Answer 25

Product differentiation and many sellers.

Question 26

True or False: Perfect competition results in the most efficient allocation of resources.

Answer 26

True.

Question 27

What market structure is characterized by a large number of firms selling similar but not identical products?

Answer 27

Monopolistic competition.

Question 28

What is the effect of high barriers to entry in a market?

Answer 28

It reduces competition.

Question 29

Fill in the blank: In a monopoly, the firm is the __________.

Answer 29

price maker.

Question 30

What is a major consequence of monopolistic competition?

Answer 30

Excess capacity and inefficiency.

Question 31

In which market structure are firms likely to engage in collusion?

Answer 31

Oligopoly.

Question 32

True or False: Oligopolistic firms are independent in their pricing strategies.

Answer 32

False.

Question 33

What is the term for a market with one seller and many buyers?

Answer 33

Monopoly.

Question 34

Fill in the blank: __________ competition leads to innovation and variety in products.

Answer 34

Monopolistic.

Question 35

What is the demand curve shape for a firm in perfect competition?

Answer 35

Horizontal (perfectly elastic).

Question 36

What is the main focus of firms in monopolistic competition?

Answer 36

Differentiating their products.

Question 37

True or False: In a monopoly, economic profits can be sustained in the long run.

Answer 37

True.

Question 38

What is a common characteristic of perfect competition?

Answer 38

Homogeneous products.

Question 39

Fill in the blank: Firms in __________ have limited pricing power due to the presence of close substitutes.

Answer 39

monopolistic competition.

Question 40

What is a potential benefit of oligopolies?

Answer 40

Economies of scale.

Question 41

What is the primary characteristic that distinguishes a monopoly from other market structures?

Answer 41

Single seller with no close substitutes.

Question 42

True or False: In perfect competition, firms can earn economic profits in the long run.

Answer 42

False.

Question 43

What is the primary reason for the existence of monopolies?

Answer 43

High barriers to entry.

Question 44

Fill in the blank: An oligopoly may lead to __________ if firms coordinate their pricing.

Answer 44

higher prices.

Question 45

What role does product differentiation play in monopolistic competition?

Answer 45

It allows firms to have some control over pricing.

Question 46

What is a defining feature of the demand curve for a monopoly?

Answer 46

Downward sloping.

Question 47

True or False: In monopolistic competition, firms can easily enter and exit the market.

Answer 47

True.

Question 48

What is the outcome of a price war in an oligopoly?

Answer 48

Lower prices for consumers, but potential losses for firms.

Question 49

Fill in the blank: In a __________, firms may produce at a level where average total costs are minimized.

Answer 49

perfect competition.

Question 50

What is the primary competition method in monopolistic competition?

Answer 50

Non-price competition.

Question 51

True or False: In a monopoly, the firm faces a perfectly elastic demand curve.

Answer 51

False.

Question 52

What is an example of a market structure with significant barriers to entry?

Answer 52

Monopoly.

Question 53

Fill in the blank: The short-run equilibrium for a monopolist occurs where marginal revenue equals __________.

Answer 53

marginal cost.

Question 54

What is the term for a market where there are many firms selling identical products?

Answer 54

Perfect competition.

Question 55

True or False: Firms in an oligopoly can achieve higher profits through collusion.

Answer 55

True.

Question 56

What is one of the main disadvantages of monopolistic competition?

Answer 56

Inefficiency due to excess capacity.

Question 57

Fill in the blank: In a monopoly, the firm has control over the __________.

Answer 57

price.

Question 58

What is a characteristic of a perfectly competitive market?

Answer 58

Firms are price takers.

Question 59

True or False: Monopolistic competition results in a homogeneous product.

Answer 59

False.

Question 60

What is the competitive behavior of firms in an oligopoly?

Answer 60

They may cooperate or compete aggressively.

Question 61

Fill in the blank: In a monopoly, the firm can sustain __________ profits.

Answer 61

economic.

Question 62

What is the effect of perfect competition on consumer choice?

Answer 62

Increases variety and lowers prices.

Question 63

True or False: All firms in a monopolistic competition have identical products.

Answer 63

False.

Question 64

What is the primary goal of firms in oligopoly?

Answer 64

Maximizing profits while considering competitors' actions.

Question 65

Fill in the blank: An __________ is a market structure with many firms and significant barriers to entry.

Answer 65

oligopoly.

Question 66

What is the impact of product differentiation in monopolistic competition?

Answer 66

It allows firms to charge different prices.

Question 67

True or False: In a monopoly, there are many substitutes available for consumers.

Answer 67

False.

Question 68

What is a key characteristic of a firm in perfect competition?

Answer 68

Cannot influence market prices.

Question 69

Fill in the blank: The primary characteristic of __________ is a few firms controlling most of the market share.

Answer 69

oligopoly.

Question 70

What is the result of a lack of competition in a monopoly?

Answer 70

Higher prices and lower quality.

Question 71

True or False: In monopolistic competition, firms can make long-run economic profits.

Answer 71

False.

Question 72

What is the market structure that leads to the most efficient production?

Answer 72

Perfect competition.

Question 73

Fill in the blank: Oligopolies may engage in __________ to increase their market power.

Answer 73

collusion.

Question 74

What is one of the main features of monopolistic competition?

Answer 74

Product differentiation.

Question 75

True or False: Firms in perfect competition can set their own prices.

Answer 75

False.

Question 76

What is the primary characteristic of a firm's demand curve in a monopoly?

Answer 76

It is downward sloping.

Question 77

Fill in the blank: In __________, firms may have some control over their pricing due to differentiated products.

Answer 77

monopolistic competition.

Question 78

What is the primary reason for the existence of monopolistic competition?

Answer 78

Product differentiation among firms.

Question 79

True or False: In oligopoly, firms may benefit from economies of scale.

Answer 79

True.

Question 80

What is a consequence of a monopoly on market efficiency?

Answer 80

It can lead to allocative and productive inefficiency.

Question 81

Fill in the blank: The demand curve for a firm in perfect competition is perfectly __________.

Answer 81

elastic.

Question 82

What is the relationship between price and marginal cost in a monopoly?

Answer 82

Price is greater than marginal cost.

Question 83

True or False: Monopolistic competition leads to lower prices for consumers compared to monopoly.

Answer 83

True.

Question 84

What is the primary characteristic of an oligopoly?

Answer 84

A few large firms dominate the market.

Question 85

Fill in the blank: __________ is the market structure where firms compete based on price and non-price factors.

Answer 85

Monopolistic competition.