Year 1 Part 2

Question 1

“What are the four main market structures?”

Answer 1

“Perfect competition+ monopolistic competition+ oligopoly+ monopoly.”

Question 2

“In perfect competition+ firms are price ____.”

Answer 2

“Takers.”

Question 3

“A monopoly has ____% market share.”

Answer 3

“100%.”

Question 4

“Oligopolies are dominated by a ____ number of large firms.”

Answer 4

“Few.”

Question 5

“Product differentiation is highest in ____ competition.”

Answer 5

“Monopolistic.”

Question 6

“List the 6 conditions for perfect competition.”

Answer 6

“1. Many buyers/sellers. 2. Perfect information. 3. Homogeneous products. 4. No barriers to entry/exit. 5. Price takers. 6. Profit maximization (MC=MR).”

Question 7

“Firms in perfect competition make ____ profit in the long run.”

Answer 7

“Normal (zero economic profit).”

Question 8

“Draw the demand curve for a perfectly competitive firm.”

Answer 8

“Horizontal (perfectly elastic).”

Question 9

“Define monopoly power.”

Answer 9

“Ability to influence prices (price maker).”

Question 10

“A natural monopoly occurs when LRAC is ____ over the entire market demand.”

Answer 10

“Falling.”

Question 11

“Two sources of monopoly power:”

Answer 11

“Barriers to entry (e.g.+ patents+ economies of scale).”

Question 12

“____ pricing is illegal and involves setting prices below cost to drive rivals out.”

Answer 12

“Predatory.”

Question 13

“Match the barrier to its example:”

Answer 13

“1. Legal barriers → Patents. 2. Sunk costs → Advertising costs.”

Question 14

“Limit pricing deters entrants by setting prices just above ____ cost.”

Answer 14

“Average.”

Question 15

“____ economies occur when large firms have lower costs.”

Answer 15

“Scale.”

Question 16

“Negative externality leads to over/under-production?”

Answer 16

“Over-production (social cost > private cost).”

Question 17

“Vaccines are an example of a ____ externality.”

Answer 17

“Positive.”

Question 18

“____ goods are under-consumed due to information failure (e.g.+ education).”

Answer 18

“Merit.”

Question 19

“Public goods are ____ and ____.”

Answer 19

“Non-rival+ non-excludable.”

Question 20

“The ____ coefficient measures income inequality (0=perfect equality).”

Answer 20

“Gini.”

Question 21

“A progressive tax takes a ____ % from higher incomes.”

Answer 21

“Larger.”

Question 22

“Transfer payments redistribute income via ____ (e.g.+ benefits).”

Answer 22

“Taxes.”

Question 23

“C____ D____ is when a good is demanded for two or more distinct uses.”

Answer 23

“Composite Demand.”

Question 24

“P____ goods are non-rival and non-excludable (e.g.+ streetlights).”

Answer 24

“Public.”

Question 25

"M____ power allows firms to act as price makers."

Answer 25

"Monopoly."

Question 26

"A____ efficiency occurs when resources are allocated optimally (MSB=MSC)."

Answer 26

"Allocative."

Question 27

"Firms in monopolistic competition sell ____ products."

Answer 27

"Differentiated."

Question 28

"In the long run+ monopolistic competition leads to ____ capacity."

Answer 28

"Excess."

Question 29

"Advertising is key in monopolistic competition due to ____."

Answer 29

"Product differentiation."

Question 30

"Oligopolies are dominated by a ____ number of large firms."

Answer 30

"Few."

Question 31

"A kinked demand curve suggests firms fear ____ if they raise prices."

Answer 31

"Losing market share."

Question 32

"Collusion in oligopolies can lead to ____ pricing."

Answer 32

"Higher (or profit maximising)."

Question 33

"A pure monopoly has ____% market share."

Answer 33

"100."

Question 34

"Monopolies are price ____ due to market power."

Answer 34

"Makers."

Question 35

"A natural monopoly exists when LRAC ____ over the entire market demand."

Answer 35

"Falls."

Question 36

"____ pricing is illegal and involves setting prices below cost to eliminate rivals."

Answer 36

"Predatory."

Question 37

"____ costs (e.g.+ advertising) cannot be recovered if a firm exits."

Answer 37

"Sunk."

Question 38

"____ pricing deters new entrants by setting prices just above average cost."

Answer 38

"Limit."

Question 39

"Patents are an example of ____ barriers."

Answer 39

"Legal."

Question 40

"Market failure occurs when resources are ____ allocated."

Answer 40

"Misallocated."

Question 41

"Complete market failure results in a ____ market (e.g.+ public goods)."

Answer 41

"Missing."

Question 42

"Public goods are ____ and ____. "

Answer 42

"Non-rival+ non-excludable."

Question 43

"The ____ problem occurs when people benefit without paying."

Answer 43

"Free-rider."

Question 44

"Give an example of a public good."

Answer 44

"Street lighting."

Question 45

"Negative externalities lead to ____ production/consumption."

Answer 45

"Over."

Question 46

"Smoking is a ____ externality in consumption."

Answer 46

"Negative."

Question 47

"Vaccines create a ____ externality."

Answer 47

"Positive."

Question 48

"Social cost = ____ cost + ____ cost."

Answer 48

"Private+ external."

Question 49

"____ goods are under-consumed due to information failure (e.g.+ education)."

Answer 49

"Merit."

Question 50

"____ goods are over-consumed due to information failure (e.g.+ cigarettes)."

Answer 50

"Demerit."

Question 51

"Government may ____ merit goods to correct under-consumption."

Answer 51

"Subsidise."

Question 52

"Asymmetric information occurs when one party has ____ information."

Answer 52

"More."

Question 53

"The 'market for lemons' illustrates ____ information in used cars."

Answer 53

"Asymmetric."

Question 54

"____ immobility occurs when workers cannot move regions for jobs."

Answer 54

"Geographical."

Question 55

"____ immobility occurs when workers lack transferable skills."

Answer 55

"Occupational."

Question 56

"The ____ coefficient measures income inequality (0 = perfect equality)."

Answer 56

"Gini."

Question 57

"A ____ tax takes a higher % from high earners (e.g.+ income tax)."

Answer 57

"Progressive."

Question 58

"____ payments redistribute income (e.g.+ benefits)."

Answer 58

"Transfer."

Question 59

"P____ goods are non-rival and non-excludable."

Answer 59

"Public."

Question 60

"M____ power allows firms to set prices above MC."

Answer 60

"Monopoly."

Question 61

"A____ efficiency occurs when resources maximise welfare (MSB = MSC)."

Answer 61

"Allocative."

Question 62

"O____ is when a few firms dominate the market."

Answer 62

"Oligopoly."

Question 63

"D____ goods are over-consumed (e.g.+ alcohol)."

Answer 63

"Demerit."

Question 64

"In competitive markets+ firms compete via ____ or ____ competition."

Answer 64

"Price+ non-price."

Question 65

"Give two examples of non-price competition."

Answer 65

"Advertising+ product differentiation+ after-sales service."

Question 66

"____ pricing is setting prices just above cost to deter new entrants."

Answer 66

"Limit."

Question 67

"Illegal ____ pricing involves temporary below-cost pricing to drive rivals out."

Answer 67

"Predatory."

Question 68

"Oligopolies may collude to act like a ____ and raise prices."

Answer 68

"Monopoly."

Question 69

"The price mechanism performs 3 key functions:"

Answer 69

"1. Signalling (shows scarcity). 2. Incentive (encourages production). 3. Rationing (allocates scarce goods)."

Question 70

"Prices rise when demand > supply+ signalling firms to ____ output."

Answer 70

"Increase."

Question 71

"The 'invisible hand' refers to markets allocating resources via ____."

Answer 71

"Self-interest."

Question 72

"A price floor (e.g.+ min wage) creates ____ if set above equilibrium."

Answer 72

"Surplus."

Question 73

"Merit goods are under-consumed due to ____ failure (e.g.+ education)."

Answer 73

"Information."

Question 74

"Government may ____ merit goods to correct market failure."

Answer 74

"Subsidise."

Question 75

"Demerit goods have negative ____ (e.g.+ smoking harms others)."

Answer 75

"Externalities."

Question 76

"Taxes on demerit goods aim to reduce consumption and cover ____ costs."

Answer 76

"Social."

Question 77

"____ goods are over-consumed in free markets (e.g.+ sugary drinks)."

Answer 77

"Demerit."

Question 78

"Private goods are ____ and ____ (e.g.+ chocolate bar)."

Answer 78

"Rival+ excludable."

Question 79

"Quasi-public goods are ____ but ____ (e.g.+ toll roads)."

Answer 79

"Non-rival+ excludable."

Question 80

"A ____ good becomes rival if overused (e.g.+ congested roads)."

Answer 80

"Quasi-public."

Question 81

"Free riders are a problem for ____ goods but not private goods."

Answer 81

"Public."

Question 82

"Street lighting is a ____ good+ while Netflix is a ____ good."

Answer 82

"Public+ private."

Question 83

"P____ M____ is the system where prices adjust to allocate resources."

Answer 83

"Price Mechanism."

Question 84

"M____ goods generate positive externalities (e.g.+ vaccines)."

Answer 84

"Merit."

Question 85

"Q____-P____ goods are partially non-rival (e.g.+ parks)."

Answer 85

"Quasi-Public."

Question 86

"The S____ function of prices shows scarcity/surplus."

Answer 86

"Signalling."

Question 87

"D____ goods are taxed to reduce over-consumption."

Answer 87

"Demerit."