#1
Which market structure is characterized by a large number of firms, similar but not identical products, and easy entry and exit?
Monopolistic competition
ExplanationMany firms with differentiated products and low barriers to entry.
#2
What is a characteristic of a monopoly market structure?
Single firm selling a unique product with high barriers to entry
ExplanationSingle seller, unique product, and significant barriers to entry.
#3
What is a key feature of perfect competition?
Identical products
ExplanationHomogeneous products traded by numerous small firms.
#4
Which market structure exhibits the highest degree of market power?
Monopoly
ExplanationSingle seller with significant control over prices.
#5
What is a defining characteristic of an oligopoly?
A few interdependent firms
ExplanationSmall number of firms with mutual influence.
#6
What does the term 'elastic demand' mean in microeconomics?
A small change in price leads to a large change in quantity demanded
ExplanationPrice change causes a substantial shift in demand.
#7
In oligopoly, firms tend to engage in strategic decision-making because:
Each firm's actions affect the market price and its competitors' profits
ExplanationInterdependence among firms necessitates strategic choices.
#8
What happens to equilibrium price and quantity in a perfectly competitive market in the long run?
Price and quantity adjust to achieve long-run equilibrium
ExplanationPrices and quantities stabilize at market equilibrium.
#9
In which market structure do firms produce close substitutes and engage in non-price competition?
Monopolistic competition
ExplanationMany firms with differentiated but substitutable products.
#10
What is the demand curve like for a monopoly firm?
Downward sloping
ExplanationDemand decreases as price increases.
#11
What is a characteristic feature of monopolistic competition?
Products are similar but not identical, allowing firms to differentiate
ExplanationDifferentiated products among many competing firms.
#12
What is a characteristic feature of a duopoly?
There are two firms dominating the market
ExplanationMarket dominated by two large firms.
#13
What is a characteristic feature of a natural monopoly?
A single firm can supply the entire market at the lowest cost
ExplanationEfficient production by a single firm due to economies of scale.
#14
In a perfectly competitive market, how does the price compare to the marginal cost for each firm?
Price equals marginal cost
ExplanationEfficiency where price aligns with marginal cost.
#15
In monopolistic competition, what happens in the long run as firms attempt to differentiate their products?
Economic profit attracts new firms, leading to a decrease in economic profit
ExplanationNew firms enter, reducing profits until they reach normal levels.