#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationPresence of numerous buyers and sellers leads to price equilibrium.
#2
In a monopoly market structure, the firm is the:
Price maker
ExplanationThe sole firm controls the market price due to absence of competition.
#3
Which market structure is characterized by a single seller with significant market power?
Monopoly
ExplanationOne seller dominates the market with exclusive control over prices.
#4
What is a natural monopoly?
A monopoly that arises due to economies of scale
ExplanationEfficiency reasons lead to a single firm dominating the market.
#5
How does a monopolistic competition market differ from a monopoly?
Product differentiation
ExplanationMultiple firms offer similar products but with perceived differences.
#6
Which characteristic is common to both oligopoly and monopolistic competition?
Significant barriers to entry
ExplanationBoth market structures inhibit new firms from easily entering the market.
#7
What is a barrier to entry in a market?
Factors that make it difficult for new firms to enter the market
ExplanationObstacles hindering new businesses from establishing themselves.
#8
Which market structure is characterized by identical products and numerous small firms?
Perfect competition
ExplanationMany small firms offer identical products, leading to price competition.
#9
What is a disadvantage of a monopoly for consumers?
High prices due to lack of competition
ExplanationAbsence of competition allows monopolies to set higher prices.
#10
What is a cartel in the context of market structures?
An agreement among firms to coordinate prices and production
ExplanationFirms collaborate to control prices and output, often to increase profits.
#11
In which market structure does a firm have the least control over the price of its product?
Perfect competition
ExplanationFirms in perfect competition are price takers, having no influence on prices.
#12
What is product differentiation in the context of market structures?
Making products distinct from competitors' products
ExplanationCreating unique features to set products apart in the market.
#13
In an oligopoly, firms are interdependent, meaning:
Their decisions impact each other's profits
ExplanationActions by one firm affect the strategies and earnings of others.
#14
What is the kinked demand curve model used to explain in oligopoly?
Price rigidity
ExplanationThe model attempts to explain why prices remain stable despite changes in costs.
#15
Which of the following is a characteristic of a duopoly?
Two sellers dominating the market
ExplanationMarket dominated by only two sellers.