Quiz on Competition and Market Power

In a small town, Nick, Mia, Angela and Avery run competing coffee shops. What is competition in economics?

• A market with no barriers to entry

• Rivalry between firms to sell goods

• A type of product differentiation

• A situation with one dominant seller

What characterizes an oligopoly?

• Many small firms

• One dominant seller

• A few large firms controlling the market

• No barriers to entry

In a small town, Ethan owns the only bakery, making him the sole provider of fresh bread and pastries. What is this situation called?

• A type of price competition

• A market with low barriers to entry

• Monopoly - a situation with one dominant seller

• A market with many competitors

What is a natural monopoly?

• A market with many small firms

• A situation where one firm can serve the entire market at a lower cost

• A type of collusion between firms

• A market with high competition

What does 'price maker' refer to?

• A firm that sets the price in the market

• A firm that has no competitors

• A firm that cannot influence market price

• A firm that engages in price wars

William and Aiden are business owners who have secretly agreed to set prices for their products to avoid competition. What is this practice called?

• Collusion - formal agreements to restrict competition

• A type of market entry barrier

• A situation with many competitors

• A method of product differentiation

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

• Pharmaceutical industry

• Automobile industry

• Telecommunications

• Agricultural markets

Abigail and Aiden are business owners in the same industry. They decide to collaborate and agree on a fixed price for their products to maximize their profits. What is this arrangement called?

• A type of monopoly

• A situation with many small firms

• A market with no barriers to entry

• • Cartel - an agreement between firms to set prices

Emma and Benjamin are competing in a local market selling similar products. They decide to lower their prices to attract more customers. What is this situation called?

• A situation where firms raise prices

• Price war - a competition where firms reduce prices

• A type of collusion

• A market with high barriers to entry

What is a characteristic of monopolies?

• High barriers to entry

• Intense price competition

• Many firms in the market

• Low prices for consumers