What is a natural monopoly?

A market where one firm controls the output

A market with multiple firms competing

A market with low start-up costs

What is a franchise in the context of monopolies?

A contract giving a single firm the right to sell goods in an exclusive market

What is price discrimination?

The division of customers into groups based on how much they will pay for a good

The practice of charging the same price to all customers

Offering discounts to all customers regardless of their group

Selling products at a loss to increase market share

What is market power?

The ability to control prices and total market output

The ability to produce goods at a lower cost

The ability to increase production without increasing costs

The ability to sell products internationally

Which of the following is an example of price discrimination?

Student discounts and manufacturers’ rebate offers

Offering a flat discount to all customers

Increasing prices during peak seasons

Selling products in bulk at a lower price

What is required for price discrimination to occur?

Market power, distinct customer groups, and difficult resale

High production costs and low demand

A large number of competitors in the market

Uniform pricing across all customer groups

What is non-price competition?

A strategy to attract customers through style, service, or location

A way to attract customers by lowering prices

A method to increase production costs

A technique to reduce advertising expenses

What is an oligopoly?

A market dominated by a few large, profitable firms

What is collusion in the context of an oligopoly?

An agreement among firms to set prices and production levels

An agreement among firms to compete aggressively

A merger between two large firms

A strategy to lower production costs

An association by producers to coordinate prices and production

A single company controlling the market

A government-regulated monopoly

A type of consumer advocacy group

What is a characteristic of markets dominated by a few large firms?

Higher prices and higher output

What is predatory pricing?

Setting prices below cost levels for the short term to drive out competitors

Setting prices above cost levels to increase profits

Setting prices at cost levels to maintain market share

Setting prices randomly to confuse competitors

What is the purpose of antitrust laws according to the document?

To encourage competition in the marketplace

To reduce government intervention

What power does the government have regarding business practices?

To regulate business practices that give too much power to a company

What is a merger as defined in the document?

A combination of two or more companies into a single firm

A split of a company into smaller units

A government takeover of a company

What action has the government taken to address monopolies?

Used anti-trust legislation to break up existing monopolies

Supported the growth of monopolies

Increased government control over markets

What is deregulation according to the document?

The removal of some government controls over a market

Increasing government controls over a market

What does the law of demand state?

As the price of a good increases, the quantity demanded decreases.

As the price of a good increases, the quantity demanded increases.

The quantity demanded of a good is independent of its price.

The law of demand does not relate to price changes.

What is the substitution effect?

The change in consumption patterns due to a change in relative prices

The change in income that affects purchasing power

The effect of advertising on consumer preferences

The impact of inflation on savings

What causes a shift in demand?

Change in production technology

Change in the number of suppliers

Change in government regulations

What is the difference between an elastic and an inelastic good?

Elastic goods have a demand that changes significantly with price changes, while inelastic goods have a demand that changes little with price changes.

Elastic goods have a demand that changes little with price changes, while inelastic goods have a demand that changes significantly with price changes.

Elastic goods are always more expensive than inelastic goods.

Elastic goods are always cheaper than inelastic goods.

What does the law of supply state?

As the price of a good increases, the quantity supplied increases.

As the price of a good increases, the quantity supplied decreases.

As the price of a good decreases, the quantity supplied remains constant.

As the price of a good decreases, the quantity supplied increases.

What does a supply schedule show?

The relationship between price and quantity supplied

The relationship between demand and supply

What is the elasticity of supply?

The responsiveness of quantity supplied to a change in price

The total amount of goods available in the market

The difference between supply and demand

The cost of producing an additional unit of a good

When does elastic supply exist? When does inelastic supply exist?

Elastic supply exists when the quantity supplied changes significantly with a change in price, while inelastic supply exists when the quantity supplied changes little with a change in price.

Elastic supply exists when the quantity supplied changes little with a change in price, while inelastic supply exists when the quantity supplied changes significantly with a change in price.

Elastic supply exists when the quantity supplied does not change with a change in price, while inelastic supply exists when the quantity supplied changes significantly with a change in price.

Elastic supply exists when the quantity supplied changes significantly with a change in price, while inelastic supply exists when the quantity supplied does not change with a change in price.

What is the difference between a fixed cost and a variable cost?

Fixed costs remain constant regardless of production levels, while variable costs change with production levels.

Fixed costs change with production levels, while variable costs remain constant regardless of production levels.

Both fixed and variable costs remain constant regardless of production levels.

Both fixed and variable costs change with production levels.

What is government regulation? What effect does it have?

Government regulation refers to the laws and rules set by the government to control or manage activities. It can have positive effects like protecting consumers and the environment, or negative effects like stifling innovation and increasing costs.

Government regulation is a type of tax imposed by the government on businesses. It primarily affects the financial performance of companies.

Government regulation is a voluntary guideline that businesses can choose to follow. It has no significant impact on business operations.

Government regulation is a form of government subsidy provided to businesses to encourage growth. It generally has a positive effect on business expansion.

Where is equilibrium shown on a supply and demand curve?

At the intersection of the supply and demand curves

At the point where supply exceeds demand

At the point where demand exceeds supply

Where is shortage shown on a supply and demand curve?

To the right of the equilibrium point

Where is surplus shown on a supply and demand curve?

To the left of the equilibrium point

How can advertising impact the market?

By increasing consumer awareness and demand

2.3 Competition Quiz

43 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is competition and how do different market structures affect it?

Competition is the rivalry among sellers to attract customers while lowering costs.

Competition is the collaboration among businesses to set prices.

Competition is the process of businesses merging to form a monopoly.

Competition is the government regulation of market prices.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a characteristic of pure competition?

Few buyers and sellers

Unique products

Many buyers and sellers

High barriers to entry

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In a pure competition market structure, what type of products are produced?

Unique products

Identical products

Luxury products

Custom products

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a barrier to entry in a pure competition market?

High demand

Start-up costs and technology

Low supply

Government regulations

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a monopoly?

A market with multiple sellers

A market dominated by a single seller

A market with no sellers

A market with two sellers

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do monopolies form?

When there are no barriers to entry

When barriers prevent firms from entering a market with a single supplier

When there are multiple suppliers

When firms freely enter and exit the market

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What can monopolies do with their power?

Lower prices significantly

Charge high prices

Offer unlimited products

Increase competition

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2.3 Competition

What is competition and how do different market structures affect it?

What is a characteristic of pure competition?

In a pure competition market structure, what type of products are produced?

What is a barrier to entry in a pure competition market?

What is a monopoly?

How do monopolies form?

What can monopolies do with their power?

What is a natural monopoly?

Why do monopolists produce less for a higher price?

How are government monopolies created?

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