Monopolies and Perfect Competition

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.

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
• none of the above

Which market structure involves selling identical products?

• Perfect Competition
• Monopolistic Competition
• Oligopoly
• Monopoly

In perfect competition, prices are controlled by

• supply and demand

• buyers

• sellers

• government

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.

Which of the following is a characteristic of a pure monopoly?

• many sellers of the good or service

• only one seller of the good or service

• many substitutes for the good or service being sold

• no barrier to entry

A market in which a single seller dominates

• monopoly

• natural monopoly

• license

• market power

A barrier to entry is

• A law established by the government to protect new industries.

• A commitment on the part of big business to allow smaller companies to compete.

• An obstacle that prevents additional workers from entering an industry, such as a union.

• An obstacle that makes it difficult for new firms to enter a market.

A monopolist is

• a price taker

• able to ignore the demand for its product when setting price

• able to set the price for its product

• able to earn only a normal profit in the long run

Why does no one firm dominate in a perfect competition?

• No firm wants to

• Each firm sells to different people

• Each firm produces exactly the same towards total supply that they cannot influence prices

• One firm will eventually dominate and make it a monopoly