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WorksheetsModels of Competition
Total questions: 15
Worksheet time: 10mins
What is a model of competition?
A description of the type of market that a business operates in
A type of market structure
A way to attract customers through style, service or location
A market dominated by a single seller
What is another term for models of competition?
Market Structure
Perfect Competition
Monopoly
Oligopoly
Which type of market structure has a large number of firms producing the same product?
Perfect Competition
Monopoly
Monopolistic Competition
Oligopoly
What is the main factor that differentiates firms in a perfectly competitive market?
Price
Quality
Location
Service
What are the four conditions for perfect competition?
Many buyers and sellers, identical products, informed buyers and sellers, free market entry and exit
Few buyers and sellers, differentiated products, uninformed buyers and sellers, restricted market entry and exit
Many buyers and sellers, differentiated products, informed buyers and sellers, restricted market entry and exit
Few buyers and sellers, identical products, uninformed buyers and sellers, free market entry and exit
Which type of business is an example of perfect competition?
Farmers Markets
Software Companies
Pharmaceutical Companies
Major League Baseball
What are the barriers to entry in a market?
Factors that make it difficult for new firms to enter a market
Expenses that a new business must pay before the first product reaches the customer
A high degree of technological know-how required in certain markets
Licenses that give inventors the exclusive right to sell their product for a certain period of time
What is a monopoly?
A market dominated by a single seller
A market structure with many companies selling similar, but not identical products
A market structure in which a large number of firms produce the same product
A market structure with a few large firms dominating the market
Why do monopolies charge high prices?
Because barriers prevent competitors from entering the market
Because they have a monopoly power
Because they take advantage of their market dominance
All of the above
Which of the following is an example of a natural monopoly?
Monroe County Water Authority
AT&T (Bell Telephone)
Microsoft
Soft Drink Companies
What are the four conditions of monopolistic competition?
Many firms, few artificial barriers to entry, slight control over price, differentiated products
Many firms, many artificial barriers to entry, complete control over price, identical products
Few firms, few artificial barriers to entry, complete control over price, differentiated products
Few firms, many artificial barriers to entry, slight control over price, identical products
How do firms in monopolistic competition attract customers?
Through nonprice competition
By offering the lowest price
By having a monopoly power
By having a large number of firms
Which type of market structure has many companies competing in an open market to sell similar, but not identical products?
Monopoly
Perfect Competition
Oligopoly
Monopolistic Competition
What is the main factor that gives firms in monopolistic competition some control over selling price?
Differentiated products
Price
Quality
Location
Name a similarity between Monopolistic Competition and Perfect Competition
