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Market Structure and Strategic Behavior Quiz

#1

Which market structure is characterized by a large number of firms, homogeneous products, and easy entry and exit?

Perfect competition
Explanation

Large number of firms with identical products.

#2

In which market structure does a single firm dominate the entire market, controlling the supply of a particular product or service?

Monopoly
Explanation

Single firm controls market supply.

#3

What is a characteristic of a perfectly competitive market?

Many buyers and sellers
Explanation

Large number of buyers and sellers.

#4

What is a characteristic of a monopoly market structure?

Unique product with no close substitutes
Explanation

No close substitutes available.

#5

Which market structure is characterized by a few large firms dominating the market?

Oligopoly
Explanation

Small number of dominant firms.

#6

What is the primary characteristic of a perfectly competitive market?

Many buyers and sellers
Explanation

Abundance of buyers and sellers.

#7

Which of the following is a characteristic of monopolistic competition?

Product differentiation
Explanation

Firms differentiate products.

#8

What is a key strategy used by firms in an oligopoly?

Collusion
Explanation

Firms cooperate to control market.

#9

In which market structure do firms engage in strategic behavior such as advertising and product differentiation?

Monopolistic competition
Explanation

Firms differentiate products, engage in advertising.

#10

What is a characteristic of an oligopoly market structure?

Mutual interdependence
Explanation

Firms' decisions affect each other.

#11

Which of the following market structures has the least amount of product differentiation?

Perfect competition
Explanation

Products are identical.

#12

What is the primary goal of a monopolistically competitive firm engaging in product differentiation?

Maximize profits
Explanation

Differentiation to increase profits.

#13

Which market structure often leads to the most efficient allocation of resources?

Perfect competition
Explanation

Efficient allocation due to competition.

#14

Which of the following is NOT a barrier to entry in a monopoly market structure?

Numerous competitors
Explanation

Lack of competitors is a barrier.

#15

Which market structure typically leads to the highest level of market power for individual firms?

Monopoly
Explanation

Single firm dominates, highest power.

#16

Which market structure is most likely to result in long-term economic profits for firms?

Monopoly
Explanation

Control over supply leads to long-term profits.

#17

What is a common strategy used by firms in an oligopoly to maintain market power?

Collusion
Explanation

Firms cooperate to maintain power.

#18

Which market structure is likely to result in excess capacity in the long run?

Monopolistic competition
Explanation

Products are differentiated, excess capacity.

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