Market Structure

What is absolute advantage?

• The ability of a country to produce a good at a lower opportunity cost than another country.

• The ability of a country to produce more of a good using the same amount of resources as another country.

• The ability of a country to produce a good with fewer resources than another country.

Which of the following is an example of comparative advantage?

• Country A can produce cars at a lower opportunity cost than computers, while Country B can produce computers at a lower opportunity cost than cars.

• Country A has more natural resources than Country B.

• Country A has a higher GDP than Country B.

How do imports impact a country's economy?

• They always lead to a trade surplus.

• They can lead to increased competition and lower prices for consumers.

• They always result in job losses in the importing country.

Which of the following is a characteristic of a monopoly?

• Many firms producing similar products.

• A single firm controls the entire market for a product.

• A few firms dominate the market but do not control it entirely.

What is a key feature of an oligopoly (cars and video games)?

• A single firm controls the market.

• Many small firms compete with each other.

• A few large firms dominate the market.

What causes cyclical unemployment?

• Changes in the seasons affecting certain industries.

• Economic downturns leading to reduced demand for goods and services.

How does absolute advantage differ from comparative advantage?

• Absolute advantage focuses on opportunity cost, while comparative advantage focuses on resource efficiency.

• Absolute advantage is about producing more with the same resources, while comparative advantage is about lower opportunity cost.

Which of the following is a characteristic of a monopoly?

• High levels of competition among many firms.

• A single firm sets prices without competition.

• Firms compete by offering differentiated products.

• A few firms have significant market power but do not control the market.

What is a common feature of oligopolistic markets?

• Many small firms with no market power.

• A single firm with complete market control.

• A few large firms with significant influence over prices.

How does comparative advantage benefit international trade?

• It enables countries to specialize in producing goods at a lower opportunity cost.

• It reduces the need for imports.