Market Structures & Public Goods

What is the difference between perfect competition and monopolistic competition?

• Perfect competition has a large number of small firms while monopolistic competition does not.

• In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.

• Perfect competition has no barriers to entry, while monopolistic competition has.

• Perfect competition has barriers to entry while monopolistic competition does not.

The market type known as perfect competition is

• almost free from competition and firms earn large profits.

• highly competitive and firms find it impossible to earn an economic profit in the long run.

• dominated by fierce advertising campaigns.

• marked by firms continuously trying to change their products so that consumers prefer their product to their competitors' products.

Which of the following market types has all firms selling products so identical that buyers do not care from which firm they buy?

• perfect competition

• monopolistic competition

Perfect competition is characterized by all of the following EXCEPT

• well-informed buyers and sellers with respect to prices.

• a large number of buyers and sellers.

• no restrictions on entry into or exit from the industry.

• considerable advertising by individual firms.

Which of the following is the best example of a perfectly competitive market?

• diamonds

• athletic shoes

• soft drinks

• lentils

Which of the following market types has the fewest number of firms?

• perfect competition

• monopoly

• monopolistic competition

• oligopoly

Which of the following market types has a large number of firms that sell similar but slightly different products?

• oligopoly

• monopoly

• monopolistic competition

• perfect competition

Which of the following market types has only a few competing firms?

• perfect competition

• monopoly

• farming

• oligopoly

Perfectly competitive firms are price takers because

• each firm is very large.

• there are no good substitutes for their goods.

• they have very little or no control over the price of their products.

• their demand curves are downward sloping.

One of the requirements for a monopoly is that

• the product cannot be produced by small firms.

• there are several close substitutes for the product.

• there is a unique product with no close substitutes.

• products are high priced.