Market Structures/Supply & Demand Quiz

Which of the following is a characteristic of a monopoly?

• Many sellers

• A single seller

• Many buyers and sellers

• Perfect information

In an oligopoly, how do firms typically behave?

• Independently, without regard for the actions of other firms

• They collude to set prices higher than in competitive markets

• They always engage in price wars

• They have no control over the market price

What is a key feature of monopolistic competition?

• Products are homogeneous

• There is only one seller

• There are many sellers and product differentiation

• Firms can enter the market freely but cannot exit

According to the law of demand, what happens when the price of a good increases?

• The quantity demanded remains unchanged

• The quantity demanded increases

• The quantity demanded decreases

• The supply of the good increases

What does the law of supply state?

• As the price of a good increases, the quantity supplied decreases

• As the price of a good decreases, the quantity supplied increases

• As the price of a good increases, the quantity supplied increases

• There is no relationship between the price of a good and the quantity supplied

Which market structure is characterized by a few large firms that have some control over the prices they charge?

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic competition

In a monopoly, what is the relationship between the market price and the marginal cost at the profit-maximizing output level?

• The market price is equal to the marginal cost

• The market price is lower than the marginal cost

• The market price is higher than the marginal cost

• There is no relationship between market price and marginal cost

What is likely to happen in a monopolistically competitive market in the long run?

• Firms will earn significant economic profits

• Firms will suffer losses

• Firms will earn zero economic profit

• All firms will become monopolies

Which of the following best describes a situation where a single firm controls the entire supply of a good or service, and no close substitutes exist?

• Oligopoly

• Perfect competition

• Monopolistic competition

• Monopoly

What does the downward slope of the demand curve represent?

• As the price increases, supply also increases

• As the price decreases, demand decreases

• As the price increases, demand decreases

• There is no relationship between price and demand