Types of Markets and the Circular Flow

Which of the following is a characteristic of perfect competition?

• Few sellers

• Identical products

• High barriers to entry

• Price-setting by firms

What is an example of a monopolistic competition market?

• Wheat farming

• The fast-food industry

• Water utilities

• A single airline controlling all flights.

What do firms in monopolistic competition use to differentiate their products?

• Lowering prices drastically

• Branding and advertising

• Collusion

• Government regulation

What is the defining feature of an oligopoly?

• Many small firms

• No product differentiation

• A few large firms dominate

• No barriers to entry

What is price leadership in an oligopoly?

• A single firm setting the price that others follow

• Government setting prices

• Firms agreeing on a fixed price

• A new company undercutting the competition.

Which of the following is an example of a natural monopoly?

• Fast food chains

• Utility companies

• Automobile manufacturers

• Clothing brands

What is the purpose of antitrust laws?

• To promote monopolies

• To restrict new businesses from entering the market

• To prevent anti-competitive practices

• To eliminate all large businesses

A cartel is:

• A government-controlled monopoly

• A group of firms working together to limit competition

• A type of small business market

• A firm that follows price leadership

What is the role of patents in a market economy?

• To discourage innovation

• To encourage progress and innovation

• To prevent competition permanently

• To promote oligopolies

Which industry is an example of an oligopoly?

• Farming

• Airlines

• Local bakeries

• Street vendors