Economics C7L1 Competition and Market Structures

What is pure competition?

• A theoretical market structure with very large numbers and identical products
• A theoretical market structure with identical products, and freedom of entry and exit
• A theoretical market structure with identical products, very large numbers, and freedom of entry and exit
• none of the above

The term market structure refers to

• the theoretical characteristics of firms in the same industry.
• the theoretical characteristics of firms in different industries.
• the profit-maximizing behavior of firms that use marginal analysis.
• the nature and degree of competition among firms in the same industry.

What is industry?

• It is the demand side of the market.
• It is the theoretical side of the market.
• It is the supply side of the market.
• It is the competitive side of the market.

Why is pure competition important?

• Economists use it to evaluate less-competitive market structures.
• Economists use it to evaluate the three conditions for competition.
• Economists use it to evaluate more-competitive market structures.
• Economists use it to evaluate perfect competition.

How do monopolistic competitors try to make their products stand out?

• They lower their prices.
• They use nonprice competition such as advertising.
• They raise their prices.
• They maximize profits.

How does the profit-maximizing behavior of a monopolistic competitor compare to that of perfect competitors, oligopolies, and monopolies?

• They all try to find the level of output where their marginal cost is equal to their marginal revenue.
• The monopolistic competitor is similar to monopoly but not to pure competition.
• The monopolistic competitor is similar to pure competition but not to oligopoly.
• The monopolistic competitor is similar to monopoly but not to oligopoly.

What is oligopoly?

• It is a market structure in which products are always similar.
• It is a market structure in which a very few large sellers dominate the industry.
• It is a market structure in which one seller controls the industry.
• It is a market structure in which prices are similar between sellers.

Name one form of collusion.

• Profit maximization
• Profit sharing
• Price fixing
• Non-price competition

What type of monopoly is based on ownership of a manufacturing method or other scientific process?

• Geographic monopoly
• Natural monopoly
• Government monopoly
• Technological monopoly

How do monopolies maximize profits?

• They equate marginal cost with marginal revenue.
• They keep marginal revenue above marginal cost.
• They keep marginal cost above marginal revenue.
• They control marginal costs and marginal revenue.