#1
Which of the following is a characteristic of a perfectly competitive market?
Easy entry and exit of firms
ExplanationPermits firms to enter or exit the market without significant barriers.
#2
In a monopolistic competition market structure, firms differentiate their products in order to:
Increase market power
ExplanationTo have some control over price and distinguish from competitors.
#3
Which market structure is characterized by a single seller of a unique product with barriers to entry?
Monopoly
ExplanationOne seller dominates the entire market.
#4
Which of the following is NOT a characteristic of perfect competition?
Price setting power for individual firms
ExplanationIn perfect competition, no firm has control over the price.
#5
In which market structure do firms have the highest degree of market power?
Monopoly
ExplanationSingle seller controls the market with no competition.
#6
The short-run supply curve of a perfectly competitive firm is typically:
Perfectly elastic
ExplanationFirm can produce any quantity at the prevailing market price.
#7
What is a characteristic feature of an oligopoly market structure?
Mutual interdependence among firms
ExplanationActions of one firm significantly impact others in the market.
#8
What is the profit-maximizing rule for a perfectly competitive firm in the short run?
Produce where marginal revenue equals marginal cost
ExplanationAt this point, profits are maximized.
#9
What happens to a monopolist's price and quantity sold when the demand for its product decreases?
Price increases, quantity sold decreases
ExplanationLess demand leads to higher prices and fewer units sold.
#10
In monopolistic competition, firms face a downward-sloping demand curve because:
There are many close substitutes for their products
ExplanationConsumers can easily switch to similar alternatives.
#11
What is the main goal of a profit-maximizing monopolist?
To produce where marginal revenue equals marginal cost
ExplanationAt this point, profit is maximized.
#12
What is an example of a barrier to entry in a monopoly?
Legal patents
ExplanationExclusive rights granted by the government.
#13
In a monopoly, the firm's marginal revenue is:
Less than average revenue
ExplanationEach additional unit sold decreases the average revenue.