#1
Which of the following is a characteristic of perfect competition?
A large number of buyers and sellers
ExplanationPerfect competition entails numerous buyers and sellers.
#2
In perfect competition, firms are price takers, meaning:
They cannot influence the market price
ExplanationFirms in perfect competition cannot impact market price.
#3
Which market structure is characterized by a single seller with significant control over price?
Monopoly
ExplanationMonopoly features a single seller with substantial price control.
#4
In a perfectly competitive market, what happens in the long run if firms are making economic profits?
New firms enter the market, increasing supply and driving down profits
ExplanationEconomic profits attract new firms, augmenting supply and reducing profits.
#5
What is a key feature of an oligopoly market structure?
A few large firms
ExplanationOligopoly is typified by the presence of a small number of large firms.
#6
Which market structure has the least control over price?
Perfect competition
ExplanationPerfect competition exerts the least control over prices.
#7
Which of the following is not a condition for perfect competition?
Existence of market power for individual firms
ExplanationPerfect competition does not allow individual firms to possess market power.
#8
In perfect competition, how does a firm maximize profit?
By increasing production until marginal revenue equals marginal cost
ExplanationFirms maximize profit by equating marginal revenue to marginal cost.
#9
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationMonopolistic competition is distinguished by product differentiation.
#10
What is the main source of market power for firms in monopolistic competition?
Product differentiation
ExplanationMarket power in monopolistic competition stems from product differentiation.
#11
What is a key characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationMonopolistic competition is characterized by product differentiation.
#12
In an oligopoly market structure, firms often engage in ______ to maximize profits.
Collusion
ExplanationFirms in oligopoly often engage in collusion for profit maximization.
#13
What is a key implication of perfect competition for economic efficiency?
It ensures allocative efficiency where price equals marginal cost
ExplanationPerfect competition leads to allocative efficiency with price equaling marginal cost.
#14
Which market structure is characterized by a few large firms dominating the market?
Oligopoly
ExplanationOligopoly features dominance by a small number of large firms.
#15
Which market structure typically results in the highest level of advertising and branding?
Monopolistic competition
ExplanationMonopolistic competition usually entails high levels of advertising and branding.
#16
Which market structure allows firms to have some control over prices?
Monopolistic competition
ExplanationFirms in monopolistic competition possess some control over prices.
#17
Which market structure tends to have the highest level of product differentiation?
Monopolistic competition
ExplanationMonopolistic competition usually has the highest level of product differentiation.