#1
In microeconomics, what does the term 'perfect competition' refer to?
A market with identical products and many buyers and sellers
ExplanationHomogeneous products and numerous buyers and sellers characterize perfect competition.
#2
Which of the following is NOT a characteristic of perfect competition?
Product differentiation
ExplanationPerfect competition lacks product differentiation.
#3
What is the main characteristic of a perfectly competitive market regarding price?
Price is determined by market demand and supply
ExplanationPrices in perfect competition are set by market forces of supply and demand.
#4
Which of the following is an example of a barrier to entry in a market?
Patents and licenses
ExplanationBarriers to entry such as patents and licenses restrict new competitors.
#5
What is the primary goal of firms operating in a perfectly competitive market?
Maximizing profit
ExplanationFirms in perfect competition aim to maximize profits.
#6
Which of the following is NOT a characteristic of monopolistic competition?
Price taking behavior
ExplanationMonopolistic competition involves firms with some control over pricing.
#7
What is a monopoly in microeconomics?
A market with only one seller and many buyers
ExplanationMonopoly involves a single seller dominating the market.
#8
Which of the following is a characteristic of monopolistic competition?
Significant product differentiation
ExplanationMonopolistic competition involves differentiated products.
#9
What is a cartel in microeconomics?
A group of firms that collude to restrict output and increase prices
ExplanationA cartel is a collusion of firms aimed at controlling output and prices.
#10
Which of the following is an example of a non-price competition strategy?
Increasing advertising expenditure
ExplanationNon-price competition includes strategies like advertising to gain market share.
#11
What is an example of a natural monopoly?
Internet service provider
ExplanationNatural monopolies arise when one firm can efficiently serve the entire market.
#12
What is the main characteristic of an oligopoly market structure?
Few sellers and interdependence among them
ExplanationOligopolies are characterized by a small number of interdependent firms.
#13
What is an oligopoly in microeconomics?
A market with a few sellers dominating
ExplanationOligopoly is characterized by a small number of dominant sellers.
#14
What is the concept of 'price discrimination' in microeconomics?
Selling identical products at different prices to different buyers
ExplanationPrice discrimination involves charging different prices based on customer characteristics.
#15
What is the concept of 'creative destruction' in microeconomics?
The introduction of new technology leading to the obsolescence of existing products
ExplanationCreative destruction refers to innovation replacing outdated technologies and products.
#16
What is the main characteristic of a duopoly market structure?
Few sellers and interdependence among them
ExplanationDuopolies involve a small number of firms with mutual dependence.
#17
What is a characteristic of a monopolist?
Unique product with no close substitutes
ExplanationMonopolists offer products with no close alternatives.