Economic Quiz #6 Unit #1

Market structure in which a large # of firms produce the same product no single seller controls

• Outstanding competition

• Solid Competition

• Pure Competition

• None of the above None of the above

This market structure has a large number of buyers and sellers with identical products.

• Perfect Competition

• Monopolistic Competition

• Oligopoly

• Monopoly

Which market structure has the lowest barrier to entry?

• Perfect Competition

• Monopoly

Perfect competition is sometimes called "Pure" competition because:

• Products are identical and price is purely set by the market

• A government agency sets price floors for all products in that market

• A few large firms dominate the market with their slightly differentiated products

• There is only one seller, so the competition is perfect

Under perfect competition,

• products are similar but not identical.
• numerous restrictions prevent firms from entering the market.
• no seller can sell a product above the prevailing market price.
• a single seller can affect price.

In a monopoly, how many firms control the sale of a product?

• One
• Few
• 15
• 30

The closest example of pure competitive market occurs in the area of __________.

• Automobiles
• Airlines
• Farming
• Utilities

Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition? 

• In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition. 
• In perfect competition there are many firms, but in monopolistic competition there are only a few firms. 
• In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product. 
• In perfect competition there are few consumers, but in monopolistic competition there are many consumers. 

Monopolistically competitive firms are considered inefficient in allocating society’s resources for which of the following reasons? 

• In long-run equilibrium, the marginal benefit exceeds the price charged by the firms. 
• In long-run equilibrium, the price is greater than the marginal cost. 
• In long-run equilibrium, average total costs are minimized.
• In long-run equilibrium, the firm is earning economic profits. 

Would Aircraft companies be in the oligopoly industry

• Yes

• No