AP Micro: Market Structures After School Review

Why does no one firm dominate in a perfect competition?

• No firm wants to
• Each firm sells to different people
• Each firm produces so little of the total supply that they cannot influence prices
• One firm will eventually dominate and make it a monopoly

Which type of market structures has many many producers(companies) that sell identical products and has no control over price?

• perfect competition
• monopolistic competition
• oligopoly
• monopoly

Which scenario is an example of a monopoly? 

• A local water company is the sole provider of water for a small town.
• A dry cleaner specializes in environmentally friendly cleaning methods.  
• A farmer produces green beans for sale at a farmer's market.
• A small number of cereal companies produce most of the cereal on the market.

In the 1990s, AT&T controlled 80% of the phone industry and was the ONLY provider of long distance phone service. This is an example of

• A monopoly
• Monopolistic Competition
• Perfect Competition
• Oligopoly

Firms in this kind of market produce goods that are very close substitutes.

• Perfect Competition

• Pure Monopoly

• Monopolistic Competition

• Oligopoly

What kind of market structure is efficient with 1 business supplying?

• natural monopoly
• oligopoly
• imperfect competition
• perfect competition

If the ice cream industry is perfectly competitive with a market price of $3 per bar, and Sigalow's Sweets charges, $3.50 per bar, how many bars will Sigalow sell?

• more than he would at a price of $3

• some, but fewer than he would at a price of $3

• just as many as he would at a price of $3

• none

• more info is needed about the prices charged by other shops

Boeing and Airbus are in a duopoly that has reached the monopoly outcome. Boeing increases it's production. If Airbus increases its production, it's profits will ______ and Boeing's profits will ________.

• increases; decreases

• increases; decreases

• decreases; decreases

• increases; does not change

• decreases; increases

A pure monopoly will produce the same amount of output as perfect competition when

• all the demanders pay one price.

• it provides more consumer surplus than perfect competition.

• it can perfectly price discriminate.

• it is forced into the fair return price.

If the technology associated with producing artificial intelligence (AI) continues to advance, over time the cost of producing AI will

• decrease, firms that use the new tech will earn an economic profit, and in the long run, new firms will enter

• decrease, firms that do not use the new tech will earn an economic profit and in the long runs new firms will enter.

• increase, firms that use the new tech will earn an economic profit and in the long runs new firms will enter.

• increase, firms that use the new tech will incur an economic loss, and in the long run, some firms will exit

• decrease, firms that use the new tech will incur an economic loss, and in the long run, some firms will exit