Economics - Chapter 7 - Market Structures

Ethan is shopping for a new laptop and notices that all the models from different brands have the same specifications and features. What type of product is this?

• Differentiated product

• Similar product

• Standardized product

Answer explanation

Ethan finds that all laptop models have the same specifications and features, indicating they are identical in quality and function. This makes them standardized products, as there is no differentiation among them.

Aria is studying different market structures in her economics class. She wants to know: Which is NOT a characteristic of perfect competition?

• Numerous buyers and sellers

• Standardized product

• Differentiated product

• Independent buyers and sellers

Answer explanation

A differentiated product is not a characteristic of perfect competition, which features a standardized product. In perfect competition, products are identical, leading to no brand loyalty among consumers.

Arjun noticed that only one seller in his town sells a unique type of handmade chocolate for which there are no close substitutes.

• Monopoly

• Oligopoly

• Monopolistic competition

• Perfect competition

Answer explanation

A monopoly exists when a single seller dominates the market with a unique product and no close substitutes, as seen with Arjun's town's handmade chocolate seller.

Evelyn noticed that many coffee shops in her neighborhood offer similar, but not standardized products. What market structure does this represent?

• Monopoly

• Oligopoly

• Monopolistic Competition

• Perfect Competition

Answer explanation

Evelyn's observation of similar but not standardized products in coffee shops indicates a market structure where many firms compete by differentiating their products, which is characteristic of monopolistic competition.

Ethan and Ava are part of a formal organization of sellers that agree to act together to set prices and limit output. What is this organization called?

• Monopoly

• Price maker

• Oligopoly

• Cartel

Answer explanation

Ethan and Ava are part of a cartel, which is a formal organization of sellers that collude to set prices and limit output, distinguishing it from a monopoly or oligopoly.

Rohan noticed that a certain type of mineral water is only available from one producer in his region. Exists when there are no other producers within a certain region

• Natural monopoly

• Government monopoly

• Technological monopoly

• Geographic monopoly

Answer explanation

A geographic monopoly occurs when a single producer dominates a specific region, as seen with Rohan's mineral water, which is only available from one source in his area.

Priya's company controls a manufacturing method or an invention protected by a patent

• Natural monopoly

• Government monopoly

• Technological monopoly

• Geographic monopoly

Answer explanation

Priya's company holds a patent, which grants exclusive rights to a specific technology or invention. This is characteristic of a technological monopoly, where control is based on unique technological advancements.

James is studying different types of monopolies in his economics class. He learns that the postal service is an example of which type of monopoly?

• Natural monopoly

• Government monopoly

• Technological monopoly

• Geographic monopoly

Answer explanation

The postal service is a government monopoly because it is operated by the government to provide mail services, ensuring universal access and regulation, unlike natural or technological monopolies which arise from different factors.

Scarlett is studying market structures and learns about the only gas station in a small town.

• Natural monopoly

• Government monopoly

• Technological monopoly

• Geographic monopoly

Answer explanation

A geographic monopoly occurs when a single firm is the only provider of a good or service in a specific location. In this case, the only gas station in the small town exemplifies a geographic monopoly.

Scarlett is opening a new restaurant and wants to attract customers. Which is NOT an example of non-price competition?

• Excellent service

• 50% off deal

• Attention getting advertisements

• Free kids meal with every adult meal

Answer explanation

A 50% off deal is a price-based strategy, while excellent service, attention-getting advertisements, and free kids meals focus on quality and value, making them examples of non-price competition.