Principles of Economics (TEST 2- MCQ)

Which of the following is NOT a Market Structure?

• Perfect Competition

• Oligopoly

• Monopoly

• Corporation

Markets like automobiles, cell phones, cable TV, and internet providers are examples of which market structure?

• Monopoly

• Oligopoly

• Perfect competition

• Monopolistic competition

Which is NOT a characteristic of a monopoly?

• Seller sets the market price
• Entry into the market is easy
• Firm sells a unique product
• One seller

Perfect competition involves:

• Sellers working together to set prices
• A large number of buyers & sellers
• Difficulty entering & exiting the market
• Little information is available to buyers

The market for milk is an example of perfect competition. Why?

• Sellers offer a nearly identical product
• Anyone can start a dairy farm or leave the dairy business at any time
• Many people buy and sell milk
• All of the above

List the four market structures in order from least competitive to most competitive.

• Oligopoly, Monopoly, Perfect Competition, Monopolistic Competition
• Perfect Competition, Oligopoly, Monopoly, Monopolistic Competition
• Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition
• Monopoly, Monopolistic Competition, Perfect Competition, Oligopoly

If a major car company such as Ford lowers their prices, what are other car companies likely to do?

• Raise their prices
• Go out of business
• Maintain their current prices
• Lower their prices

What are the advantages of economies of scale?

• Costs less per unit to produce an item
• Reduces barriers to entry in the market and increases competition
• Better quality products are produced

How many firms are there in a perfect competition?

• 1
• 2-5
• Many

Factors that make it difficult for new firms to enter a market are called

• Barriers to entry
• Factors of production
• Limited supply
• Monopolistic Outlook