Unit 3 Test: Part 1 Competition & Market Structures

Which of these are features of pure competition?

• many firms

• barriers to entry

• identical products

• high barriers to entry

Which of the following best defines a monopoly?

• A market where a single individual owns all of the companies in the market.

• A market where a single entity is large enough to set prices without impacting demand.

• A market where there are many well-informed buyers and sellers.

• A market where one individual owns companies through the entire distribution line, from raw materials to distribution of finished goods.

Government regulations exist to discourage monopolies in the U.S. economy.

• True

• False

As a market structure, ____________ offers goods and services that are similar, but not perfect, substitutes.

• monopoly

• oligopoly

• monopolistic competition

• pure competition

The federal government has a number of policies that keep firms from controlling the price and supply of certain important goods. The government policies are known as __________.

• predatory pricing

• deregulation

• trust busting

• antitrust laws

Some economists call an industry a(n) _______ if the four largest businesses produce at least 70-80% of the output. This is a market controlled by a few.

• oligopoly

• monopoly

• pure competition

• monopolistic competition

A product that is considered the same regardless of who makes it, is considered a "good".

• True

• False

When companies cut their prices very low to win business, this can start a(n) ​ (a)   , which can be great for consumers but harmful for producers. But when members of a(n) ​ (b)   , agree among each other to illegally set prices, this is considered ​ (c)   . An outcome of this "agreement" is called ​ (d)   ​where firms agree to sell products at the same or very familiar price.

• price war
• oligopoly
• collusion
• price fixing

Factors that make it difficult for new businesses to enter a market are called ​ (a)   ; which can lead to ​ (b)   competition. This is a market structure that fails to meet the conditions of pure competition.

• barrier to entry
• imperfect
• monopolistic
• limited resources

Deregulation means that the government no longer decides what role each company can play in a particular market.

• True

• False