CHAPTER 2

Which of the following is a characteristic of a perfectly competitive market?

• Single seller

• Price makers

• Homogeneous products

• High barriers to entry

Which of the following best describes a monopoly?

• A market with many sellers offering differentiated products

• A market with a single seller with significant market power

• A market where firms engage in non-price competition

• A market with free entry and exit

Which type of market structure is characterized by product differentiation and many sellers?

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly

An example of monopolistic competition would most likely be:

• Electricity supply in a city

• Restaurants in a city

• Agricultural produce markets

• Internet service providers

In an oligopoly, firms are most likely to:

• Act independently of one another

• Cooperate to maximize joint profits

• Have perfect information about the market

• Face no barriers to entry

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

• Free entry and exit of firms

• Many buyers and sellers

• Differentiated products

• Perfect information

Which of the following strategies is commonly used in monopolistic competition to attract customers?

• Price fixing

• Advertising and branding

• Natural monopoly regulation

• Government subsidies

Which market structure is most likely to engage in collusion?

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly

Which of the following is true about price setting in a monopoly?

• The firm is a price taker

• Prices are determined by market demand and supply only

• The firm can set prices above marginal cost

• The firm always produces at the lowest possible cost

Which market structure is characterized by high barriers to entry and few large firms dominating the market?

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly