024 - E.22: Competition Impacts on Pricing and Production

In a perfectly competitive market, how are prices determined?

• By consumer preferences

• By the dominant seller

• By the government

• By supply and demand

What characteristic defines a monopoly?

• Many sellers

• Identical products

• Only one seller

• Many buyers

How do firms in an oligopoly typically influence pricing?

• Through supply and demand

• By actions of competitors

• Through government regulations

• By being price takers

What is a key feature of monopolistic competition?

• Price wars

• Product differentiation

• Single seller

• Identical products

How does competition affect production efficiency?

• Increases efficiency

• Has no effect

• Stops production

• Decreases efficiency

What role does innovation play in competitive markets?

• It's discouraged

• It reduces product quality

• It leads to higher prices

• It's crucial for differentiation

How might firms adjust in response to intense competition?

• Decrease innovation

• Stop advertising

• Increase prices

• Adjust production levels

What strategy do firms in an oligopoly market might engage in to gain market share?

• Reducing efficiency

• Producing identical products

• Price wars

• Becoming price takers

In which market structure are firms considered price takers?

• Monopolistic competition

• Perfect competition

• Oligopoly

• Monopoly

What can lead to fluctuations in capacity utilization rates in competitive markets?

• Government policies

• Lack of innovation

• Changes in demand or competitive moves

• Fixed production levels