Economics: Chapter 7 Review

When there is a perfect competition, one seller emerges as the primary controller of price as it squeezes out its competitors.

• True
• False

The monopoly market structure is the opposite of the perfect competition market structure.

• True
• False

Barriers to entry in a monopolized market include legal restrictions, economies of scale, and control of an essential resource.

• True
• False

Monopolies can lose money.

• True
• False

Competition forces firms to be efficient.

• True
• False

Because barriers to entry are high, firms in monopolistic competition can't enter or leave the market with ease.

• True
• False

Firms in an oligopoly are independent; and one firm's price, output or advertising has no effect on the actions of its rivals.

• True
• False

Antitrust laws try to prevent monopoly in those markets where competition seems desirable.

• True
• False

All of the following are characteristics of monopolistic competition EXCEPT

• downward sloping demand curve for each firm.
• no market power among individual firms.
• slightly differentiated products.
• low entry barriers.

An example of a commodity is

• a one-of-a-kind brand
• a copyrighted book
• a bushel of wheat
• an automobile