Perfect and Imperfect Competition 1

What is a product market?

• A market with many buyers and sellers

• A market for inputs into production

• A market for goods and services consumed by people

• A market with only one firm

Which of the following is an example of a resource market?

• The market for tax preparation services

• The market for shirts

• The market for labor

• The market for consumer electronics

What characterises a monopoly?

• Many buyers and sellers with perfect information

• A few firms with some product differentiation

• Many firms and no barriers to entry

• One firm with high barriers to entry

Why might a government grant a monopoly to a firm?

• To reduce prices for consumers

• To eliminate all other firms in the market

• To encourage competition

• To allow the firm to recoup R&D investments

In a perfectly competitive market, firms are considered:

• Oligopolists

• Price takers

• Monopolists

• Price setters

Which market is closest to perfect competition?

• The market for luxury cars

• The market for smartphones

• The market for sugar

• The market for large aircraft

What is a key feature of an oligopoly?

• A single firm with complete market control

• Many buyers and sellers with perfect information

• Many firms with no barriers to entry

• A few firms with high barriers to entry

Which industry is an example of an oligopoly?

• The sugar market

• The aircraft industry

• The breakfast cereal industry

• The local farmer's market

What distinguishes monopolistic competition from perfect competition?

• High barriers to entry

• Product differentiation

• A single firm dominating the market

• No barriers to entry

What is a monopsony?

• A market with a few firms dominating

• A market with one seller and many buyers

• A market with one buyer and many sellers

• A market with many buyers and sellers