Micro Part 2 FCHS

What is an oligopoly?

• A competitive state involving many producers making similar goods

• A market shared by a small number of producers

• A free market economy

• A state of total government economic control

Identify four negative characteristics of monopolies.

• Less incentive to cut costs

• Less incentive to develop new products

• Less choice

• Promotes competition

• Higher prices

Why would the U.S. government seek to limit the development of business monopolies?

• to guarantee low prices

• to encourage competition

• to increase production levels

• to improve hiring practices

Which example best illustrates a market structure with perfect competition?

• Wheat crops that are sold for animal feed

• The government-funded defense industry

• Car manufacturers that make compact vehicles

• An electric power company

Compared to a free market, an oligopoly has fewer —

• sellers

• regulations

• buyers

• products

Select three characteristics of perfect competition.

• Consumers have many substitute products.

• The market is free to enter or exit.

• All firms sell different products.

• All firms sell an identical product.

• Consumers have few substitute products.

Read the definition. A market characterized by many sellers and many buyers. Which term best fits with the definition?

• Monopoly

• Monopolistic competition

• Oligopoly

• Limited market

Read the description. In most places, citizens can only buy electricity for their homes from one provider. The barriers to the electricity market are too high for new sellers. Many buyers are eager to purchase electricity as most modern homes require it. Which type of market best fits with this description?

• Pure competition

• Natural monopoly

• Monopolistic competition

• Oligopoly

Which characteristic distinguishes monopolistic competition from pure competition?

• the presence of many products and consumers

• a lack of price differences among products

• few barriers to enter or exit the market

• firm ability to make profits in the short-run

In which market structure do many producers sell products that are identical to one another?

• monopoly

• monopolistic competition

• pure competition

• oligopoly