Ch. 3 Test Review - Competition and Market Structure

What is a real-life example of a market that is close to perfect competition?

• an oil and gas cartel

• a farmer's market

• a computer monopoly

• a public school system

A major characteristic of monopolistic competition is that prices will be:

• higher than in perfect competition

• lower than in perfect competition

• higher than in a true monopoly

• unrelated to the type of competition

What is an example of an oligopoly?

• ten firms making 50 percent of a nation's stoves

• four firms making 99 percent of a nation's sodas

• one company making 95 percent of a nation's scooters

• fourteen firms making 25 percent of a nation's ice cream

Which market structure is easiest for a newcomer to enter?

• perfect competition

• monopolistic competition

• monopoly

• All are easy to enter

One way that firms in a monopolistic competition engage in nonprice competition is through:

• fixed costs

• variable costs

• advertising

• production

What kind of market runs most efficiently when one large firm supplies all of the output?

• a natural monopoly

• an imperfect competition

• perfect competition

• network

How much control over price do companies in a perfectly competitive market have?

• very little

• total control

• none

• some

Verizon, AT&T, Sprint, and T-Mobile are an example of what market structure?

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly

One main difference between monopolistic competition and perfect competition is that:

• in monopolistic competition sellers can profit from differences between products

• in monopolistic competition there are fewer sellers and more buyers

• in perfect competition prices are set by the government

• in perfect competition the buyer is free to buy from any seller

Why is perfect competition considered the simplest market structure?

• The firms produce identical products at the same price

• The firms' products are regulated by the government

• The firms are free from any government regulation

• The firms differentiate from each other