Unit 3: Market Structure and Competition

What are the three conditions required for a theoretical market structure of pure competition?

• Small number of buyers and sellers, different products, and government intervention

• Unlimited number of buyers and sellers, unique products, and price regulation

• Limited number of buyers and sellers, similar products, and government control

• Large number of buyers and sellers, identical products, and freedom of entry and exit

Luna, Charlotte, and Isla are running different ice cream shops in the same town. Each shop offers unique flavors and toppings that are not available in the other shops. What is this scenario an example of in terms of market competition?

• Differentiated products

• Identical products

• Freedom of entry and exit

• Large number of sellers

Noah, Abigail, and William are running a lemonade stand. They decide to compete with the other stands not based on the price of their lemonade, but on something else. What is this nonprice competition based on?

• The price of their lemonade

• The appearance, quality, or design of their lemonade stand

• The number of other lemonade sellers in the market

• Government regulations on lemonade stands

In which market structure do a few large sellers dominate and have the ability to affect prices in the industry?

• Pure competition

• Monopoly

• Oligopoly

• Monopolistic competition

What is "collusion" in the context of market structure?

• agreement among buyers to only buy at a certain price (price "fixing")

• agreement among producers to only sell at a certain price (price "fixing")

• conflict in the market

• collaboration among businesses in an oligopoly

What is the philosophy of laissez-faire in relation to government and business activity?

• Government should regulate business activities

• Government should not interfere with business activity

• Government should interfere with business activity

• Government should control all business activities

In which market structure are average costs of production lowest when all output is produced by a single firm?

• Government monopoly

• Technological monopoly

• Geographic monopoly

• Natural monopoly

What market structure is demonstrated by there being just one store in most small towns?

• Geographic Monopoly

• Technological Monopoly

• Natural Monopoly

• Government Monopoly

Which is an example of a public good?

• a personal laptop

• a public park

• a stolen car

• a large company with many shareholders

What is the main characteristic of an oligopoly?

• Large number of sellers

• Identical products

• Freedom of entry and exit

• Few large sellers dominate the market