Market Structures Quiz

Which of the following is a characteristic of a perfectly competitive market?

• Few sellers

• Price makers

• Homogeneous products

• High barriers to entry

In the short run, a firm in a perfectly competitive market will shut down if:

• Price is less than marginal cost

• Total revenue is less than total cost

• Price is less than average variable cost

• Marginal revenue is greater than marginal cost

Which of the following best describes a monopolistic competition market structure?

• A few large firms dominate the market

• Firms sell identical products

• Firms sell differentiated products

• There are significant barriers to entry

In the long run, firms in monopolistic competition earn:

• Positive economic profit

• Negative economic profit

• Zero economic profit

• Profits higher than monopoly firms

Which of the following is NOT a characteristic of an oligopoly?

• Few large firms dominate the market

• High barriers to entry

• Mutual interdependence among firms

• Firms are price takers

In a monopoly, the profit-maximizing quantity is found where:

• Price equals marginal cost

• Marginal revenue equals marginal cost

• Average total cost is minimized

• Demand equals supply

Which of the following is true about a natural monopoly?

• It exists due to high start-up costs and economies of scale

• It results from government regulation

• It produces at the socially optimal quantity

• It charges the same price as a competitive market

Game theory is most commonly used to analyze behavior in which market structure?

• Perfect competition

• Monopoly

• Monopolistic competition

• Oligopoly

Price discrimination occurs when a firm:

• Sells different products at different prices

• Charges different prices to different consumers for the same product

• Reduces prices to attract customers

• Increases prices due to inflation

Which of the following is a key difference between perfect competition and monopoly?

• Number of firms

• Barriers to entry

• Price determination

• All of the above