Market Structures & Business Organizations

Which market structure is characterized by many buyers and sellers with easy entry and exit and identical products?

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

This market structure is known as perfect competition. It is characterized by many buyers and sellers, easy entry and exit, and identical products. There is no single dominant firm in the market, and all firms are price takers. Prices are determined by the forces of supply and demand.

Which market structure is characterized by 2-4 firms with some variety in goods and high barriers to entry?

• prefect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

This market structure is known as an oligopoly. Oligopolies are characterized by a small number of firms that produce similar or identical products, and there are high barriers to entry, such as high start-up costs, government regulations, or strong brand loyalty. The firms in an oligopoly have some control over the market price, and they often engage in strategic pricing and non-price competition.

Which market structure is characterized by one firm with complete barriers to entry with no substitutes for its goods?

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

This market structure is known as a monopoly. A monopoly is characterized by one firm that has complete barriers to entry, meaning that no other firms can enter the market and compete. Additionally, there are no substitutes for the goods produced by the monopoly, meaning that consumers have no other options for the goods they need.

Which market structure is characterized by many firms with some variety in goods and low barriers to entry and exit?

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

This market structure is known as monopolistic competition. There are a large number of frms but there is variety among products.

Fast food and clothing are examples of

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

Fast food and clothing are examples of consumer goods. There are a large number of businesses that sell each. Fast food (McDonald's, Burger King, Jack-in-the-Box, In and Out, Dairy Queen, etc.) These goods are not identical so this is an example of monopolistic competition.

American based commercial airlines, American auto industry are examples of

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

These are examples of oligopoly as you have 2-4 companies that dominate each industry . Airline--American, SW, Delta

Farmer's market and stock market are examples of

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

Farmer's market and stock market are considered to be examples of perfect competition. As you have identical products, one share of stock for a company is the same as another share of stock for that company, and it is easy to enter and exit.

Professional sports leagues are examples of

• perfect competition

• monopolistic competition

• oligopoly

• monopoly

Answer explanation

Professional sports teams are monopolies as you have to get approval from existing owners to start a new team---high barriers to entry.

A business organization owned by one person is

• sole proprietorship

• partnership

• corporation

Answer explanation

Sole proprietorship is a business owned by 1 person.

A business organization owned by 2 or more people

• sole proprietorship

• partnership

• corporation

Answer explanation

A business organization owned by two or more people is known as a partnership. Partnerships are a type of business structure in which two or more people share ownership of a business and are personally liable for its debts and obligations. Partnerships can be formed for any type of business, including professional services, retail stores, and manufacturing. Partnerships are relatively easy to form and require minimal paperwork. However, partners are personally liable for the debts and obligations of the business, which can be a major risk.