Economics Chapter 7

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

• A theoretical market structure with very large numbers, identical products, freedom of entry and exit, and perfect knowledge by all buyers and sellers of market conditions

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.