Types of Markets: REVIEW of Notes

In a perfectly competitive market, which of the following characteristics is LEAST likely to be true?

• Many buyers and sellers exist

• Products are virtually identical

• Firms can easily enter and exit the market

• Individual firms have significant price-setting power

Product differentiation in monopolistic competition primarily serves to:

• Increase production costs

• Create artificial distinctions between similar products

• Reduce consumer choice

• Eliminate market competition

Which market structure most closely resembles the theoretical model of 'perfect competition'?

• Pharmaceutical industry

• Agricultural commodity markets like eggs

• Automobile manufacturing

• Telecommunications

Non-price competition typically involves:

• Lowering product prices

• Reducing manufacturing costs

• Emphasizing unique brand characteristics

• Eliminating product variations

An oligopoly is characterized by:

• Hundreds of competing firms

• A small number of dominant firms

• Completely free market entry

• Identical product offerings

Which factor does NOT contribute to product differentiation?

• Advertising

• Packaging

• Monopolistic pricing

• Brand loyalty

In a monopsony market structure, the key distinguishing feature is:

• Multiple sellers

• A single buyer

• Perfect competition

• Identical product prices

The primary advantage of monopolistic competition is:

• Complete price control

• Minimal consumer choices

• Diverse product offerings

• Guaranteed market dominance

Which market characteristic best describes the produce section of a grocery store?

• Monopoly

• Perfect competition

• Oligopoly

• Monopolistic competition

Product differentiation encourages producers to:

• Reduce innovation

• Maintain static product designs

• Continuously improve products

• Eliminate consumer choices