Market Structures

What are the main characteristics of perfect competition?

• The main characteristics of perfect competition are: many buyers and sellers, homogeneous products, free entry and exit, perfect information, and price-taking behavior.

• Differentiated products

• Limited information availability

• Few buyers and sellers

How does a monopoly determine its pricing strategy?

• A monopoly prices its products at a fixed rate regardless of demand.
• A monopoly determines prices by following competitors' pricing strategies.
• A monopoly sets prices based on government regulations.
• A monopoly sets prices to maximize profits based on demand and cost analysis.

In a perfectly competitive market, firms are considered price:

• Makers

• Takers

• Controllers

• Dictators

What behavior is typical in an oligopoly market?

• Constant pricing with no market influence by firms.

• Interdependent pricing and potential collusion among a few dominant firms.

• Perfect competition with many small firms.

• Monopolistic behavior with a single dominant firm.

Explain the concept of short-run equilibrium for a firm.

• It occurs where marginal cost equals marginal revenue, maximizing profit or minimizing losses.

• It occurs when total revenue exceeds total costs.

• It is achieved when a firm produces at maximum capacity regardless of costs.

• It is when a firm has no fixed costs.

A monopolist's deadweight loss is caused by:

• Producing too much output

• Producing too little output

• Charging a price below marginal cost

• Charging a price equal to marginal cost

Define the term 'market' in the context of economics.

• A market is a type of currency used for trading.

• A market is a government-controlled system for distributing resources.

• A market is a place where only goods are sold without any services.

• A market is a system where buyers and sellers interact to exchange goods and services.

What distinguishes an oligopoly market from other market structures?

• A single firm controls the entire market without competition.

• Prices are set by government regulation rather than market forces.

• A small number of firms dominate the market, leading to interdependent decision-making.

• Many firms compete independently with no influence on each other.

Describe the Sweezy demand curve and its significance.

• It indicates that all firms have identical pricing strategies.

• It shows perfect competition in markets.

• It represents price rigidity in oligopolistic markets.

• It is a linear representation of demand in monopolistic markets.

In the long run, firms in monopolistic competition earn:

• Economic profits

• Economic losses

• Zero economic profits

• Indeterminate