Econ Chapter 7.1 - 7.3 Quiz

How many firms are there in a perfectly competitive market?

• many

• one

• two

• a group of 20

Which of the following best describes the products sold in a perfectly competitive market?

• slight differences between products

• entirely different products

• products protected by a 20-year patent

• identical products

In which of the following markets are firms said to be "price takers"?

• monopoly

• oligopoly

• monopolistic competition

• perfectly competitive

Which of the following markets represents the concept of perfect competition the best?

• energy market

• tennis shoe market

• tomato market

• cell phone market

Which of the following describes a perfectly competitive market?

• very difficult entrance into the business

• very few barriers to entry

• need for specialized patents to be able to produce

• need collusion to set prices

What is one positive application of a monopoly in the economy?

• provide essential service free market fails to provide

• erect high barriers to competition

• to establish one producer controlling prices

• to price gouge consumers

Which of the following best describes a monopoly?

• a few producers who compete for consumer demand

• infinite producers with little share in market prices

• many firms in a market trying to undercut prices

• market with only one producer with no close substitutes

Which of the following is not an example of barriers to entry?

• government regulations

• creativity

• start-up costs

• control of resources

What is the primary purpose of a patent?

• to exclude competition

• to grant the patentor exclusive rights to profit from a process

• to increase competition in the free market

• to create brand loyalty among consumers

Why are certain industries like natural gas, water, and sewage better for society by operating like a monopoly?

• natural monopolies make these necessary industries more socially efficient

• people do not mind paying exorbitant prices for necessities

• people don't realize how much water and sewage costs

• there is no supply chain to control going into these products