#1
Which of the following is a characteristic of perfect competition?
A large number of firms
ExplanationPerfect competition is characterized by a large number of small firms.
#2
What is the formula for calculating total revenue?
Price × Quantity
ExplanationTotal revenue is calculated by multiplying price per unit by the quantity sold.
#3
Which of the following is NOT a characteristic of perfect competition?
Price-setting power for individual firms
ExplanationPerfect competition does not allow individual firms to set prices as they are price takers.
#4
What is the main characteristic of a perfectly competitive market?
Homogeneous products
ExplanationPerfectly competitive markets feature homogeneous (identical) products.
#5
What is a characteristic of a monopolistic competition market?
Product differentiation
ExplanationMonopolistic competition is characterized by product differentiation among firms.
#6
Which market structure has the highest degree of product differentiation?
Monopolistic competition
ExplanationMonopolistic competition involves high product differentiation among firms.
#7
What is the main characteristic of a natural monopoly?
High barriers to entry
ExplanationNatural monopolies have high barriers preventing new firms from entering the market.
#8
What is the relationship between marginal cost (MC) and average variable cost (AVC) when AVC is at its minimum?
MC = AVC
ExplanationAt the minimum point of average variable cost, marginal cost equals average variable cost.
#9
In a monopolistic competition market, firms maximize profit by producing where:
Marginal revenue equals marginal cost
ExplanationFirms in monopolistic competition maximize profit by producing where marginal revenue equals marginal cost.
#10
What is a characteristic of an oligopoly market structure?
One firm dominates the market
ExplanationOligopoly typically involves a few large firms dominating the market.
#11
In the short run, a perfectly competitive firm will shut down if:
Price is less than average total cost
ExplanationA perfectly competitive firm will shut down if it cannot cover its average total cost with the price it receives.
#12
Which of the following is a long-run adjustment in a monopolistically competitive market?
Entry or exit of firms
ExplanationIn the long run, monopolistically competitive markets adjust through the entry or exit of firms.