IE 8 - Market Structures

Which of the following is NOT a characteristic of perfect competition?

• Price taking firms

• Identical products

• High barriers to entry

• Perfect knowledge of the market

In a perfectly competitive market, firms will produce at a price that is at least equal to which of the following?

• Average Total Cost (ATC)

• Average Fixed Cost (AFC)

• Average Variable Cost (AVC)

• Marginal Revenue (MR)

Which of the following market structures has the highest number of firms?

• Oligopoly

• Monopoly

• Perfect Competition

• Monopolistic Competition

In the long run, firms in perfect competition will earn:

• Supernormal profits (Super Profits)

• Normal profits (Break Even)

• Losses

• Excess profits

Which characteristic differentiates monopolistic competition from perfect competition?

• Number of firms

• Differentiated products

• Free entry and exit

• Price taking behavior

Which of the following best describes an oligopoly?

• A single firm dominates the market

• Many firms sell identical products

• A few large firms dominate the industry

• Firms have no pricing power

What is the key characteristic of a collusive oligopoly?

• Firms compete aggressively on price

• Firms coordinate prices and output

• Firms operate independently

• There are no barriers to entry

Which of the following is an example of a barrier to entry in a monopoly?

• Perfect knowledge

• Lack of economies of scale

• Control over key inputs

• Low fixed costs

A formal collusive agreement between firms in an oligopoly is called a:

• Monopoly

• Price war

• Cartel

• Duopoly

In a monopolistic competition market structure, what happens in the long run?

• Firms continue earning supernormal profits

• New firms enter, reducing individual firm profits to normal levels

• Firms leave the market, increasing profits for remaining firms

• Market share is fixed and does not change