#1
In perfect competition, firms are price _________.
Takers
ExplanationFirms in perfect competition accept market prices.
#2
What is a characteristic feature of a perfectly competitive market?
Homogeneous products
ExplanationProducts in perfect competition are identical.
#3
In which market structure does a single firm dominate the market?
Monopoly
ExplanationA monopoly is characterized by a single dominating firm.
#4
What is the term for a market with only one seller and no close substitutes?
Monopoly
ExplanationA monopoly is characterized by a single seller without close substitutes.
#5
In which market structure does a single firm have the power to influence the market price?
Monopoly
ExplanationMonopolies control market prices due to their singular dominance.
#6
Which of the following is not a condition for perfect competition?
Barriers to entry
ExplanationPerfect competition lacks barriers preventing entry into the market.
#7
In a perfectly competitive market, what happens in the long run if firms are making supernormal profits?
New firms enter the market
ExplanationSupernormal profits attract new firms in perfect competition.
#8
What is the role of advertising in a perfectly competitive market?
It has no significant role
ExplanationAdvertising does not differentiate products in perfect competition.
#9
Which market structure has the highest degree of product differentiation?
Monopolistic competition
ExplanationMonopolistic competition features diverse product offerings.
#10
What is a characteristic of monopolistic competition?
Product differentiation
ExplanationProduct diversity is a key feature of monopolistic competition.
#11
Which market structure is characterized by interdependence among firms?
Oligopoly
ExplanationOligopolies involve firms relying on each other's actions.
#12
Under perfect competition, what is the shape of the firm's demand curve?
Horizontal
ExplanationThe demand curve for a firm in perfect competition is flat or horizontal.
#13
Which market structure tends to have the highest level of economic profit in the long run?
Monopoly
ExplanationMonopolies can sustain high economic profits over time.
#14
Which market structure typically results in allocative efficiency?
Perfect competition
ExplanationPerfect competition leads to efficient resource allocation.
#15
Which market structure tends to have the highest level of product innovation?
Oligopoly
ExplanationOligopolistic competition often drives product innovation.
#16
What is the primary source of market power in monopolistic competition?
Product differentiation
ExplanationProduct diversity gives market power in monopolistic competition.
#17
What is a characteristic feature of a perfectly elastic demand curve?
It is horizontal
ExplanationA perfectly elastic demand curve is completely horizontal.