Week 2 (2nd Quarter) Classwork-Market Structure

1. In a perfectly competitive market, firms are:

• a) Price makers

• b) Price takers

• c) Monopolists

• d) Oligopolists

2. Which of the following is a characteristic of monopolistic competition?

• a) Homogeneous products

• b) A few large firms dominate the market

• c) Product differentiation

• d) Barriers to entry are high

3. In perfect competition, long-run economic profits are:

• a) Positive and large

• b) Negative

• c) Zero

• d) Unpredictable

4. Which of the following markets best represents monopolistic competition?

• a) Agriculture

• b) Soft drinks

• c) Airlines

• d) Restaurants

5. In a perfectly competitive market, firms produce at the point where:

• a) Marginal cost equals marginal revenue

• b) Average total cost equals marginal cost

• c) Price is greater than marginal cost

• d) Marginal cost exceeds marginal revenue

6. Which of the following is a key difference between perfect competition and monopolistic competition?

• a) Firms in perfect competition face a downward-sloping demand curve

• b) Firms in monopolistic competition produce identical products

• c) Firms in monopolistic competition have some control over prices

• d) There are significant barriers to entry in perfect competition

7. In the long run, a firm in monopolistic competition will:

• a) Earn positive economic profits

• b) Earn zero economic profits

• c) Experience losses

• d) Achieve perfect efficiency

8. Which of the following best describes a perfectly competitive firm’s demand curve?

• a) Downward sloping

• b) Perfectly inelastic

• c) Perfectly elastic

• d) Upward sloping

9. Product differentiation is a key feature of:

• a) Perfect competition

• b) Oligopoly

• c) Monopolistic competition

• d) Monopoly

10. In the short run, a firm in monopolistic competition:

• a) Can earn economic profits

• b) Is guaranteed to break even

• c) Faces perfectly elastic demand

• d) Cannot differentiate its product