MANECON-PRELIM-Part2

In a perfectly competitive market, firms:

• Can set their own prices

• Must accept market prices

• Always maximize profits

• Control consumer behavior

Which of the following markets has the most control over prices?

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic competition

The term "market power" refers to:

• The ability to control prices

• The ability to increase sales

• The power of the government to regulate

• The influence of advertising

Which of the following would increase market power?

• Lowering prices

• Increasing competition

• Gaining exclusive rights to a product

• Reducing barriers to entry

A natural monopoly occurs when:

• There is only one seller

• It is more efficient to have one firm supply the product

• Government forces firms to merge

• Prices are too low

What is an example of a legal monopoly?

• Meralco, the sole distributor of electricity in the Philippines

• A local bakery

• A multinational tech company

• An online retailer

In a monopoly, price and quantity of a product are determined by:

• Market demand

• The single firm

• Consumer preferences

• Government policies

Which of the following is a characteristic of perfect competition?

• Firms set prices based on costs

• Consumers have perfect information

• Barriers to entry are high

• Firms can earn long-run abnormal profits

Monopolies can charge higher prices because:

• They face no competition

• Consumers have perfect knowledge

• There are many substitutes

• They have government support

Which market structure is most likely to encourage innovation due to competition?

• Monopoly

• Oligopoly

• Perfect competition

• Monopolistic competition