Market Structure Quiz

There are four types of market structure in the free market economy.

• True

• Maybe

• Not Sure

• False

Of the following statements, which is not a characteristic of a perfectly competitive market?

• The large number of buyers and sellers will cause the buyer and seller to have no power to determine or control market price

• The products produced by each firm in a perfectly competitive market are homogeneous

• Buyers and sellers have perfect knowledge about market conditions

• They are barriers to prevent the entry of new firms into the market

Efficient allocation of resources is present in a

• Monopolistic Market

• Monopolistically Competitive Market

• Perfect Competitive Market

• Oligopolistic Market

Of the following statements, which is true about monopolies?

• Monopolies always generate profit

• Monopolies can set the price or production quantity in a market, but not both

• Monopolies produce output at minimum average cost

• Monopolies engage in intensive non-price competition

The most frequent criticism of monopolies is that

• monopolies always try to generate maximum profit.

• monopolies do not care for the welfare of consumers.

• production costs are too high in a monopoly.

• the failure of monopolies to efficiently allocate factors of production.

Of the following statements, which is not true about a monopolistically competitive market?

• May experience losses in the short run.

• Produces output at the lowest cost per unit.

• Does not allocate factors of production efficiently.

• Freedom to enter or leave the market.

Perfectly competitive firms and monopolistically competitive firms tend to generate normal profit in the short run. However, only in a monopolistically competitive market

• revenue will be equal to marginal cost.

• average revenue will be equal to average cost.

• price will be equal to average cost.

• price will be greater than marginal cost.

Of the following factors, which does not contribute to the existence of an oligopoly?

• Benefits of economies of scale due to large-scale production

• The desire to generate more profit through the combination of two or more firms.

• Increase in competition due to product differentiation.

• Freedom to enter or leave the market.

In an oligopolistic industry, firms are inter-reliant. This means that

• each firm needs assistance from other firms.

• each firm produces a good that is a close substitute for other firm's goods.

• the actions of one firm will influence other firms.

• the demand curve of each firm is perfectly elastic.

Compared to a perfectly competitive firm, an oligopolistic firm will

• supply a lower quantity of product but charge a higher price.

• supply a greater quantity of product and charge a higher price.

• supply a lower quantity of product and charge a higher price.

• supply a larger quantity of product but charge a lower price.